It’s no secret that housing prices have been rising rapidly for close to a decade. The coronavirus has almost certainly brought this trend to a halt.

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Even still, at the beginning of the year, owning a house was actually a more affordable option than renting in 53 percent of U.S. housing markets, according to the 2020 Rental Affordability Report released by ATTOM Data Solutions. While figures may be in flux, currently this data is still relevant.

ATTOM looked at the 50th percentile average for three-bedroom properties from the Department of Housing and Urban Development, the second quarter of 2019 average weekly wages from the Bureau of Labor Statistics, and the January to November 2019 home price data from publicly recorded sales deeds in 855 counties nationwide. And contrary to popular wisdom, ATTOM found that in 455 of those 855 counties, owning a three-bedroom home was more affordable than renting one.

“The analysis shows a split between different-sized markets, with ownership more affordable mainly in lightly populated counties and renting more affordable in more populous suburban or urban areas,” ATTOM noted.

The report, however, did not include data on apartment rentals.

Click here for interactive map.

As one might expect, the more densely-packed urban areas tended to be the least affordable to buy. In 94 of the 136 counties (69 percent) with a population over 500,000, renting was more affordable than buying. Furthermore, in counties with a population of over 1 million—36 of the 43 counties (84 percent)—renting was more affordable than buying.

Anyone who’s ever lived in Manhattan or San Francisco can surely attest to this without looking over any studies.

On the other side of the coin, the trend was the opposite in many less-populated counties. In such counties, buying was more affordable than renting, which is likely surprising to some.

Related: How to Rent Your Property to the Right Tenants—Fast

Housing Affordability in the U.S.

The report notes that renting a three-bedroom home costs an average of 37.6 percent of the average income for the same area. In some of the markets you might expect, these rents are downright unaffordable. This is particularly true for dense counties on the coasts, as well as some in Colorado and Hawaii.

California appears to have it the worst, however. For example, the worst ratio belongs to Santa Cruz County in California, where rent averages 82.1 percent of the average wage. Marin County comes in at 75.3 percent—not much better. It should thereby not be surprising that one poll found half of the people in California (which has many of the most unaffordable counties) have considered leaving the state and cite housing costs as the number one reason.

Indeed, how is anyone supposed to live in places like Santa Cruz County, when the average rent eats up almost the entire paycheck of the average worker?

On the other hand, the most affordable counties were Roane County, Tennessee (population: 53,140) and Steuben County, New York (population: 98,990) at 20.1 and 22.2 percent respectively. Both are relatively small, which fits with the nationwide trend of less populated counties faring better in terms of housing expenses.

Rising Home Prices vs. Rental Prices & Wage Growth

The report further notes that home prices have risen faster than rental prices in 575 of the 855 counties (67 percent). In addition, home prices rose faster than wages in 567 of 855 counties (66 percent). These trends are likely tied at the hip. As housing prices outpace wages in most areas, renting becomes a more desirable option for most people.

Wage growth itself outpaced rental prices in 484 of the 855 counties (56.6 percent), however.

Key Takeaways

The United States has likely just ended its longest-ever economic expansion. The coronavirus and subsequent lockdown (as well as other systemic issues like mounting government and consumer debt and the yield curve inversion last year) should spell downward pressure on housing prices in the future.

ATTOM’s report doesn’t speculate on the future of housing prices, but it would seem unlikely that housing prices can continue to outpace wage growth indefinitely.

That being said, any correction will likely vary dramatically by location. In areas where housing is becoming increasingly unaffordable, both home prices and rents will likely fall—and possibly by a very substantial margin.

Related: Recession Prep 101: Investing in Real Estate During a Financial Crisis

In less populated parts of the country, home prices are less likely to be affected—especially since those areas make up the bulk of the 53 percent of counties where homeownership is already more affordable than renting.

A general recession would still hurt such prices, but given people in less-populated counties spend significantly less on housing as a percent of their overall income (whether owning or renting), the effect should be substantially smaller. Of course, any speculation needs to be heavily qualified as economic predictions have a very poor track record overall.

Regardless, the report has some very interesting insights into the U.S. housing market, which real estate investors may find particularly useful. Check it out for yourself here.

In which counties are you considering investing? Why?

Comment below!