For the longest time, people have been debating whether you should buy or rent your primary residence. Want more articles like this? Create an account today to get BiggerPocket's best blog articles delivered to your inbox Sign up for free But this article is not intended to weigh all of the pros and cons of each option. If you want that information, check out my article about buying versus renting. Instead, this article is meant to help you understand the financial bottom line and to figure out which parts of the country you are more likely to be able to buy a house. Should You Buy or Rent a Home Right Now? In my opinion, this answer should always be driven by one main question: “Will this house cash flow if/when I vacate it?” If the answer to that question is a resounding yes, then market swings are less important because you can hold the house even in a downturn. If the answer is “no, but…” then you need to put a LOT more thought into the current state of the market and the what ifs of a market downturn. Obviously, the market should always be a consideration. I’m not suggesting that a cash-flowing property allows you to throw caution to the wind. I simply mean that it is more forgiving. Related: 8 Ways to Identify the Best Places to Buy Rental Property Major Caveat When Interpreting This Report Keep in mind as you read this report that it says 53 percent of housing markets where data was collected. That absolutely does NOT mean over half of the population. For example, it is more affordable to rent in San Diego County, and that is a HUGE population foothold. Renting Is More Affordable Than Owning in Highly Populated Counties In 84 percent of the counties with a population of over 1 million, it is more affordable to rent. That means in places like Los Angeles County, Harris County (Houston), Cook County (Chicago), San Diego County, etc., it is more affordable to rent than to purchase a residence. I currently live in north San Diego County and made the decision to rent a residence, while renting the spare bedrooms on Airbnb. My living expenses have gone down significantly by doing this, which allows me to save a lot of money through a house hack—despite not owning the home. When you live in expensive, overpopulated areas, it is important to understand where you are in the market. If you buy at the top and are unable to cash flow, you could find yourself stuck between a rock and a hard place during a market downturn. The Least Affordable Rental Markets in America According to ATTOM Data Solutions, the least affordable rental markets are located in California, Colorado, and Hawaii. In Santa Cruz, Calif., 82.1 percent of average wages are required to rent a residence! Can you imagine spending that much of your income on rent? It is even wilder that it is more affordable to rent than to buy a home in these unaffordable markets. Personally, I wouldn’t choose to live somewhere that expensive. But if you don’t have that option, look into roommates or some other form of house hacking in order to keep your head above water. The Most Affordable Rental Markets in America ATTOM’s data show that the most affordable rental markets are located in Tennessee, New York, Alabama, and Ohio. In Roane County, Tenn. (west of Knoxville), only 20.1 percent of average wages are required to rent a residence! To put that in perspective, on average you could rent four residences in Roane County, and it would still be more affordable (as a percentage of your wages) than renting a single residence in Santa Cruz County! I would absolutely choose to live somewhere affordable like the Midwest, and you should look into it, as well. In a market with consistent cash flow, affordable homes, and low living expenses, it is much easier to build wealth. This is especially true if you have a career that doesn’t adjust the salary based on your location. A great example of this is any job you can do online, where you get paid a set salary (or commission) regardless of your location. Home Prices vs. Average Market Rent Home prices are rising faster than rent in 67 percent of the markets from which ATTOM pulled data. This number comes from 575 of the 855 counties analyzed in the report that are showing home prices rising faster than rent. If that holds true, it will become MUCH more affordable to rent in most markets. For this reason, it is always worth looking into renting a residence. There is no shame in renting as a real estate investor. Grant Cardone swears that owning a home is a terrible decision. Related: Grant Cardone Is Right: Owning a Primary Residence Usually ISN’T Smart There may be some truth to this, as even a paid-off home accrues expenses with maintenance, taxes, insurance, etc. and can be a liability. That being said, homeownership CAN be more affordable than renting, and you need to do your homework. Make sure you understand the TOTAL cost of homeownership and the TOTAL cost of renting. Then, make an informed, logical (not emotional) decision about whether it makes sense to buy or rent in your market. Is Buying More Affordable? Unfortunately, the answer is “that depends.” There is no way to definitively answer whether buying or renting is the better choice for you. You need to weigh several variables to make this decision: how long you’ll live in the property, are you house hacking, will it cash flow if/when you move out, how friendly are tenant laws in your state, what is your risk tolerance, how much-deferred maintenance does the property have, etc. In many situations, buying makes a lot more sense than renting a residence, but the reverse is also true at times. Make sure that you are buying for the right reasons, and don’t let “I’m a real estate investor” bias convince you to buy a home when renting makes more sense! ATTOM Methodology ATTOM Data Solutions looked at the 50th percentile average rental data for three-bedroom properties in 2020. They pulled information from the U.S. Department of Housing and Urban Development (HUD) and the Bureau of Labor Statistics in order to determine average rents and average weekly wages across the country. In total, ATTOM looked at data in 855 counties nationwide! Questions? Comments? Let’s discuss below in the comment section.