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- It was more affordable to rent than to buy across the US in 2018, according to a new report.
- Many Americans have been priced out of the housing market in recent years.
- Sluggish wages are in part to blame, with living costs outpacing earnings in many cities.
As home prices continue to grow faster than wages, an increasing number of Americans may turn to rentals.
Renting a home was more affordable than buying one in 2018 in more than half of the counties analyzed by the national property database ATTOM Data Solutions, according to a rental affordability report out Thursday, with real-estate prices rising faster than wages in 80% of US markets.
“Renting a home is clearly becoming the more attractive option in this volatile housing market,” said Jennifer von Pohlmann, spokesperson for ATTOM.
In 2018, it was less expensive to rent a three-bedroom property than to buy a median-priced home in 442 of 755 analyzed counties, or 59%, the company found using official wage and housing figures and public record sales deed data.
That held true in each of the nation’s 18 most populated counties and in all but three counties with a population of one million or more, according to the report, which encompass cities like New York, San Francisco, Chicago, Houston, and Phoenix. The three counties where it was more affordable to buy a home than rent were Wayne County in Michigan, Philadelphia County in Pennsylvania, and Cuyahoga County in Ohio.
The findings underscore affordability concerns that have been growing in the housing market over the past few years, as slowing construction activity, the new tax law, and rising interest rates compound housing shortages across the country.
In October, a survey by the mortgage company Freddie Mac found that more than three-quarters of Americans viewed renting as more affordable than owning a home, up 11 percentage points from six months earlier.
But with stubbornly weak wage growth across the US, affordability issues have not spared renters either. According to the ATTOM report, average rents climbed faster than earnings in 52% of markets last year.
There have been signs Americans could soon begin seeing pay rates increase as the labor market continues to tighten. But in 2018, real wages increased at about 2.9% on average.
“One of the missing equations over the past decade has been wage growth,” Jonathan Miller, the chief executive of real estate and appraisal firm Miller Samuel, said in a recent interview. “If you look at wage growth with inflation factored in and then at housing prices, there’s a big disconnect.”