Buying a home makes more financial sense than renting in more than half of U.S. housing markets. Despite home-price appreciation outpacing rent growth in 55 percent of markets, buying a home is still more affordable than renting in 58 percent of the nation's real estate markets, according to a new RealtyTrac report analyzing sales data from 504 counties with populations of at least 100,000.
What's more, the rise in rents is outpacing weekly wage growth in 57 percent of the housing markets."Renters in 2016 will be caught between a bit of a rock and a hard place with rents becoming less affordable as they rise faster than wages, but home prices rising even faster than rents," says Daren Blomquist, vice president at RealtyTrac. "In markets where home prices are still relatively affordable, 2016 may be a good time for some renters to take the plunge into home ownership before rising prices and possibly rising interest rates make it increasingly tougher to afford to buy a home."
The report found that the least affordable markets for renters — where average wage earners need to spend the highest percentage of their income on renting a three-bedroom property — are counties in Honolulu, Washington, D.C., New York, and the Northern California metros of Salinas, Santa Cruz, and San Francisco. Average rents in all six of those markets require more than 60 percent of average wages.
Also, the markets that saw the largest increases in rents are:
- Sumter, S.C.
- Burlington, N.C.
- Goldsboro, N.C.
- Houma-Thibodaux, La.
- Missoula, Mont.