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Buying more affordable than renting in two-thirds of US counties
  • Jul 24, 2015
  • New Home Ambassador
  • buying versus renting home buying New homes Builders

A higher number of individuals might decide to apply for a U.S. home mortgage instead of signing another expensive lease for an apartment. According to RealtyTrac, investing in a house is more affordable than renting in most major counties.

 

A higher number of individuals might decide to apply for a U.S. home mortgage instead of signing another expensive lease for an apartment. According to RealtyTrac, investing in a house is more affordable than renting in most major counties.

 

Renting rates increase, making buying more affordable. RealtyTrac's Buy-to-Rent analysis revealed 66 percent of U.S. counties have better home affordability than rent.

 

The analysis considered median incomes of 285 counties in the U.S. and how much is needed to pay fair-market rent for a three-bedroom apartment, then compared it to the amount that would be needed for monthly mortgage payments, property taxes and insurance for a purchased property, noted Mortgage Daily News.

 

The results indicated 29.96% of household income was needed to pay for rent, while only 29% was necessary to buy a home.

 

"As home price appreciation moderates and aligns more closely with trends in rental rates, the returns in the buy-to-rent market are stabilizing and becoming more predictable - if not as lucrative as they were for investors who purchased a few years ago near the bottom of the market," Daren Blomquist, vice president at RealtyTrac noted. "Buying rentals continues to be a brilliant strategy that allows investors to hedge their bets in a real estate market shifting away from homeownership and toward a sharing economy."

 

The number of buy-to-rent returns also decreased in 59% of analyzed counties when compared on a year-over-year basis. This is the first time this has occurred in the last five months. According to the analysis, three-bedroom rental rates jumped 3% on a year-over-year basis for all 285 major counties included in the report. In 2014, the year-over-year change was only 1%.

 

Some counties better to buy. There are a number of regions where, on average, rent is notably more expensive than buying a home. Some of these include:

 

San Bernardino County, California

Clark County, Nevada

Miami-Dade County, Florida

Wayne County, Michigan

Broward County, Florida

The rising rent in regions like South Florida, coupled with historically low interest rates, encourage more individuals to purchase homes due to financial circumstances.

 

In addition, wage increase also may contribute to a higher number of interested buyers deciding to enter the market and buy homes.

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