Buying a home is now more affordable than renting in nearly two-thirds of markets across the United States.
RealtyTrac combined data from the U.S. Department of Housing and Urban Development, the Bureau of Labor Statistics and public record sales deed data in 540 counties, with at least 900 home sales in last year.
The average monthly fair market rent on a three-bedroom residence in 2017 will cost 38.6 percent of average salary. Comparatively, a monthly home payment, which includes mortgage, property taxes and insurance, on a median-priced home will cost 36.6 percent of average salary.
Out of the 540 counties analyzed, there were 55 in which the average fair market rent for a three-bedroom property will cost more than 50 percent of average wages, according to RealtyTrac.
“While buying continues to be more affordable than renting in the majority of U.S. markets, that equation could change quickly if mortgage rates keep rising in 2017,” said Daren Blomquist, senior vice president with ATTOM Data Solutions, the parent company of RealtyTrac. “In that scenario, renters who have not yet made the leap to homeownership will find it even more difficult to make that leap this year. Additionally, renting may end up being the lesser of two housing affordability evils in a growing number of high-priced markets.”
The report did find that both rent and the cost of homes for sale are increasing more quickly than salaries. Rents are expected to rise 4.2 percent this year, while home prices rose 5.7 percent in 2016, compared to 2015. Average wages only increased 2.2 percent from last year. However, Philadelphia was named one of the 203 counties in which average wage growth was growing quicker than rent cost.