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Owning a home is cheaper than renting in two thirds of the US, but should you buy in 2021?

Owning a home is cheaper than renting in two thirds of the US, but should you buy in 2021?
(Image credit: Getty)

Owning a home is cheaper than renting one in almost two thirds of US counties, as the impact of low mortgage rates on affordability continues to outweigh the pressures exerted by rising property prices. According to ATTOM Data Solutions, owning a median-priced three-bedroom home is more affordable than renting a three-bedroom property in 572, or 63%, of the 915 US counties analyzed for the research. 

And so competitive are the ultra low mortgage rates available from the best mortgage lenders, this has happened even though home prices have increased faster than rents in 83% of those counties and faster than wages in two-thirds. 

"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% are helping to keep the cost of rising home prices in check," said Todd Teta, chief product officer with ATTOM Data Solutions, the analysts behind the research. "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.”

Where is it most affordable to buy a home?

Across the survey overall, the median-priced three-bedroom home requires at least a third of average weekly wages in almost half (48%) of the counties analyzed.

For those wanting to get the truck rental for moving booked, the report reveals that owning a home is most affordable in the South and Midwest, particularly for residents of Cocke County, east of Knoxville, where homeownership takes up just 9.8% of average wages. Among the larger counties with a population of at least one million, Detroit is the most affordable, requiring 15.2% of average wages to own, followed by Philadelphia at 20.7%, Cleveland (20.9%), Pittsburgh (21.8%) and Charlotte (28.3%). 

At the other end of the market, where you’d probably need to take out a personal loan each month just to pay the mortgage, the least affordable area for home ownership is Marin County in North California, where 105.6% of wages is needed to buy - followed by large cities in Brooklyn (101.3%), and Vail Colorado (99.8%).

Owning a home is cheaper than renting in two thirds of the US, but should you buy in 2021? Image shows dollar bills clutched by a pair of hands in front of a home.

(Image credit: Getty)

Where is it most affordable to rent?

When it comes to renting, the most affordable areas are also typically found in the South and Midwest, led by Roane County, outside Knoxville, where you’ll pay just 18.4% of your wages to a landlord. And among the largest counties that are home to over a million people, Allegheny in Pittsburgh (23.9%); Cuyahoga, Cleveland (24%), and Fulton County, Atlanta, are all eminently affordable. 

The least affordable areas for renting are mostly in the West, led by Santa Cruz County, CA (82.9%), while among the more populous cities, Kings County, Brooklyn, (62.5%), Orange County, outside Los Angeles (60%), and Queens County, New York (56.3%) would take up the majority of the average paycheck.

Should you buy a home in 2021?

Amid the uncertainty of last year, the US housing market remained remarkably strong, thanks in no small part to the record low mortgage rates that the best refinance mortgage companies were able to consistently offer. For those with the necessary finances in place, buying a home remained very much a possibility, even in the face of the challenges presented by COVID-19 - indeed, US home sales hit a 14-year high in the summer as buyers rushed to capitalize on the favorable mortgage rates on offer. 

Typically this means having a reliable income and a good credit score, and perhaps looking to the best credit repair services if your credit rating needs a boost. But importantly for those thinking of buying or moving in 2021, mortgage costs remain as cheap as they have ever been. According to Freddie Mac, the average 30-year fixed-rate mortgage came in at just 2.65% for the week ending January 7, the lowest rate in the survey’s history which dates back to 1971. 

And even if rates start to rise this year, as it is predicted they will, Sam Khater, Freddie Mac’s chief economist, says any such increase will be “modest”, leaving most prospective buyers in a good place to pursue their home buying dreams.