Market Data Report: Renting Looks More Attractive Than Ever in 2019

by | BiggerPockets.com

Was your New Year’s resolution to buy a home in 2019? That’s great—if you can afford it.

But for many people, purchasing property just might be a pipe dream (at least for the moment).

America is facing a significant affordable housing shortage, something likely to deter lots of would-be buyers from making the leap from renter to owner this year.

In fact, renting is more affordable than buying in about 60 percent of U.S. housing markets, according to recent research from ATTOM Data Solutions.

Its 2019 Rental Affordability Report took a look at properties all over the country, finding a three-bedroom rental to be more inexpensive than buying a median-priced home in 442 of the 755 counties it analyzed.

Rent Here, Not There

As would be expected, findings from the report confirm the cost of renting varied widely by location.

The top five most affordable rental markets included:

  1. Roane County (Knoxville area), Tenn.
  2. Peoria County, Ill.
  3. McMinn County (Athens), Tenn.
  4. Green County (Dayton), Ohio
  5. Rhea County (Dayton area), Ohio

home-for-rent

The top five least affordable rental markets included:

  1. Santa Cruz County, Calif.
  2. Honolulu County, Hawaii
  3. Spotsylvania County, Va.
  4. Maui County, Hawaii
  5. San Benito County, Calif.

Don’t Hate the Messenger

“With rental affordability outpacing home affordability in the majority of U.S. housing markets, and home prices rising faster than rental rates, the American dream of owning a home, may be just that—a dream,” said Jennifer von Pohlmann, ATTOM’s director of content and PR.

Adding insult to injury, home prices continue to trend upward, but employee pay? Not so much.

Data shows the median cost of purchasing a home is rising faster than average weekly wages in the vast majority (80 percent!) of regions studied.

Related: With Markets Shifting, Should You Invest in Real Estate Now—Or Wait to Buy?

ATTOM’s new data reiterates findings from a previous study on the affordability—or more often than not, the lack of affordability—of purchasing a home under current economic conditions.

housing-crisis

According to its U.S. Home Affordability Report published late last year, “the U.S. median home price in the fourth quarter was at the least affordable level since Q3 2008—a more than 10-year low.”

Cue the sad trombone.

But fortunately, there’s somewhat of a silver lining.

Landlords, Rejoice!

Aside from ruining aspiring buyers’ resolutions, today’s economic climate could spell good news for well positioned investors and current landlords.

Related: Why Demand for Rentals Will Likely Rise in 2019

“With home price appreciation increasing annually at an average of 6.7 percent in those counties analyzed for this report and rental rates increasing an average of 3.5 percent, coupled with the fact that home prices are outpacing wages in 80 percent of the counties, renting a home is clearly becoming the more attractive option in this volatile housing market.”

How do you feel about the current affordable housing shortage? Do you see this trend reversing course anytime soon?

I’d love to hear from you. Leave a comment below.

About Author

Jessa Claeys

An editor and copywriter who has spent 10+ years creating content for print and digital publications, Jessa serves as the Managing Editor for BiggerPockets.com.

8 Comments

  1. Vaughn K.

    I don’t see this trend continuing for much longer. Fundamentals ALWAYS rule markets at the end of the day. A combination of average income in an area and interest rates ultimately decides where prices can be long term.

    Fortunately MOST of the country isn’t in a massive bubble like last go around, but many trendy cities surely are. By my rough math Seattle is about 40% over valued, SF even more so. Lots of other places are not far behind Seattle.

    Whether there will be a hard crash in the trendy cities, or going flat for an extended time I do not know… Most lesser markets don’t have far to drop though, so I can’t see massive dips, just small ones or going flat while inflation puts pricing back in line. We’ll see!

    • Elaine Lam

      We are investors in sold out of Seattle at the top in the trendy neighborhood of Belltown for about double what we paid… I did a 70 year analysis and it has had 4 crashes including the great recession… The market recently peaked in 2017-18 and I would expect it to hold for two to three years and then pullback about 30% to 40%… It usually takes about 18 months from when the market turns before people are willing to start discounting… We are expecting to get back in in 2022-2024… Always an equity play as they rents to purchase ration is never very good compared to to other markets but the equity appreciation is stunning because they have to tear down buildings to create new units…

      • Vaughn K.

        I agree with all that. Something along those lines is very likely in Seattle IMO, and in these other trendy cities too. They’re all overheated to varying degrees. Seattle has definitely been going down the last few months, so we might be ready to see continued drops already. We’ll see!

  2. Argenis ortiz

    I couldn’t agree more, however, certain markets are hurting in both areas of mortgage, and rent affordability. For what I’ve seen in the Boston area, even renting is becoming unbearable. The reason I say that, is because I’ve experienced the market explode first hand. I’ve even heard of high earners offering up to $100k more than a property is worth, “cash” Just to live in the area, then pour another $100k into that property to force “phantom” appreciation. Then, they try to rent the property for over $2500 a month. Good luck finding and/or keeping renters at those rates. With the average mortgage at $580k and the Average rent at $2500. This no longer looks like a reasonable place to live, especially for the working class. Moreover, when 35 % of your income is gone in rent, then another 21% in taxes, making the remaining 44% balance last you the whole year is tough. The sustainability of this overinflated market cannot last, therefore a market correction is inevitable.

  3. Nathan G.

    I think the market will balance because the upward trends of the last 8 years just isn’t sustainable. However, I’m still predicting a strong rental market for the foreseeable future. We have an aging population that is getting tired of keeping up the lawn and extra bedrooms. Many of them will sell off and find a rental so they can reduce responsibilities and free up time for travel, grandchildren, and other pursuits. On the other end of the spectrum, we have young people that don’t seem to care as much about home ownership, gardening, or even raising families. I think many of them will be happy renting their entire lives with no desire to purchase and settle.

    These are obviously generalities but the percentages are high enough to keep me intrigued.

  4. Patricia Smith

    I also agree that the market will crash at some point and there are some indicators that show an upcoming market correction. The only question is: when will this happen and not if.
    During a market correction ( From an investors perspective) renting a property will get harder. As a strong competition for an investor we might see a shift where HOMEOWNERS will also rent their houses and move back home with their parents or friends in order to pay their mortgage and therefore NOT to have to sell their property. The other problem I see is when the government decides to put strict regulations on the whole AirBnB – Business which will bring more houses and apartments onto the renting market. From my perspective I am trying to be prepared for the upcoming crash without being paralyzed about it 😉

  5. Logan Badenhop

    In my experience living in rural northwest Ohio the problem is a lack of availability issue more than anything. The younger 20-somethings who dont hit the work force until 22-24 (after college) no longer in most cases have the ability to meet the criteria most banks are looking for. This pushes their dream of owning a home into their late 20’s at best and even then the majority of this group will only be pre approved for a home in the 100,000-150,000 range which in this market are generally small/run down homes in sub par neighborhoods unless they are up to the challenge of a fixer upper. And let’s face it much of the younger crowd isn’t exactly skilled in the many aspects of home Reno which means hiring it out and quickly going over budget. The other issue is that people are simply living longer which means higher demand in small communities. Not to many 20 somethings can afford to build and when the older folks do pass away, word spreads and their homes are sold before they ever actually go on the market. Long story short, I don’t think it’s necessarily that the public is trending more towards renting because they prefer that route. I just think the typically age of a first time home owner is slowly growing older.

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