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April 9, 2021

Owning a Home is Still More Affordable than Renting One

Disentangle housing affordability. How is it possible that owning a home is considered "more affordable" than renting a comparable one?

If spending more time at home over the past year is making you think hard about buying instead of renting, you’re not alone. You may, however, be wondering if the dollars and cents add up in your favor as home prices continue to rise. According to the experts, in many cases, it’s still more affordable to buy a home than to rent one. Here’s why. ATTOM Data Solutions recently released the 2021 Rental Affordability Report, which states:
Owning a median-priced three-bedroom home is more affordable than renting a three-bedroom property in 572, or 63 percent of the 915 U.S. counties analyzed for the report. That has happened even though median home prices have increased more than average rents over the past year in 83 percent of those counties and have risen more than wages in almost two-thirds of the nation.”

How is this possible?

The answer: historically-low mortgage interest rates. Todd Teta, Chief Product Officer with ATTOM Data Solutions, explains:
“Home-prices are rising faster than rents and wages in the 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.”
These low rates are a big factor in driving affordability. Teta also notes:
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.”

Bottom Line

If you’re considering buying a home this year, let’s connect today to discuss the options that match your budget while affordability is in your favor.

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