Buying vs renting a home in 2021. Home prices are rising across the country but it might still be more affordable to buy a home than rent one in 2021.
Buying vs Renting a Home in 2021
Home prices are rising faster than rents in 83 percent of the 915 U.S. counties ATTOM Data Solutions analyzed for their new report — and yet owning a median-priced three-bedroom home is still more affordable than renting a three-bedroom property in 572, or 63 percent of the counties included in the study.
“Home-prices are rising faster than rents and wages in a majority of the country. Yet, home ownership is still more affordable, as amazingly low mortgage rates that dropped below 3 percent are helping to keep the cost of rising home prices in check,“ said Todd Teta chief product officer with ATTOM Data Solutions.
“It’s startling to see that kind of trend. But it shows how both the cost of renting has been relatively high compared to the cost of ownership and how declining interest rates are having a notable impact on the housing market and home ownership. The coming year is totally uncertain, amid so many questions connected to the Coronavirus pandemic and the broader economy. But right now, owning a home still appears to be a financially-sound choice for those who can afford it.”
Where It’s More Affordable to Buy vs Rent
Buying a home is more affordable than renting in less-populated counties with less than 1 million residents and especially among those with less than 500,000 people as well as in the South and Midwest.
The most affordable markets for owning a home are Cocke County, TN (east of Knoxville) (9.8 percent of average wages needed to own); Edgecombe County (Rocky Mount), NC (10.7 percent); Bartholomew County (Columbus), IN (10.8 percent); Darlington County, SC (outside Florence) (11.4 percent) and Vermillion County, IL (east of Champaign) (11.8 percent).
Among counties with a population of at least 1 million, the most affordable markets include Wayne County (Detroit), MI (15.2 percent of average wages needed to own); Philadelphia County, PA (20.7 percent); Cuyahoga County (Cleveland), OH (20.9 percent); Allegheny County (Pittsburgh), PA (21.8 percent) and Mecklenburg County (Charlotte), NC (28.3 percent).
Conversely, the least affordable markets for owning a home are Marin County, CA (outside San Francisco) (105.6 percent of average wages needed to own); Kings County (Brooklyn), NY (101.3 percent); Eagle County (Vail), CO (99.8 percent); Santa Cruz County, CA (98.1 percent) and New York County (Manhattan), NY (95.9 percent); Orange County, CA (76.7); Queens County, NY (73.9 percent) and Alameda County (Oakland), CA (70.2 percent).
Where It’s More Affordable to Rent vs Buy
The most affordable markets for renting are led by Roane County, TN (outside Knoxville) (18.4 percent of wages needed to rent); Benton County (Rogers), AR (20.7 percent); Madison County (Huntsville), AL (21.6 percent); Greene County, OH (outside Dayton) (22.5 percent) and Sullivan County (Kingsport), TN (22.6 percent).
In counties with a population of at least 1 million, Allegheny County (Pittsburgh), PA (23.9 percent of average wages needed to rent); Cuyahoga County (Cleveland), OH (24 percent); Fulton County (Atlanta), GA (24.6 percent); Wayne County (Detroit), MI (26 percent) and Oakland County, MI (outside Detroit) (26.1 percent) are most affordable for renting.
On the flipside, the markets that are least affordable for renting are led by Santa Cruz County, CA (82.9 percent of average wages needed to rent); Santa Barbara County, CA (68.7 percent); Marin County, CA (outside San Francisco) (67.9 percent); Park County, CO (outside Denver) (67.5 percent) and Kauai County, HI (66 percent); Kings County (Brooklyn), NY (62.5); Orange County, CA (outside Los Angeles) (60 percent); Queens County, NY (56.3 percent), San Diego County, CA (55.6 percent) and Contra Costa County, CA (outside San Francisco) (55 percent).
Is It Better to Buy or Rent a Home in 2021?
Whether it’s better to buy or rent a home in 2021 really depends on what your budget is and where you’re looking to live. If you’ve been saving for a downpayment and are flexible about location, it might be the perfect time to buy. If you aren’t sure what your budget is, haven’t saved for a down payment and are simply eager to take advantage of favorable mortgage rates, you might want to slow down and reassess your situation before rushing ahead. Buying a home is only more affordable than renting a home if you’re in the right area and can afford to pay the mortgage — plus all the other costs associated with homeownership including homeowners insurance, utilities, property taxes and home maintenance.