The average three-bedroom rental is more affordable than owning a comparably sized median-priced home in 95% of the 222 U.S. counties analyzed by ATTOM’s 2023 Rental Affordability Report. Consuming more than one-third of average wages in most major housing markets, both renting and owning a three-bedroom home are significant financial burdens, according to the report.
The report included counties with a population of 100,000 or more, at least 100 sales from January through November of 2022, and sufficient data. In almost three-quarters of markets, average fair market rents are increasing more than average local wages in 156 of the 222 counties (70%) studied. These include Los Angeles County, California; Cook County (Chicago), Illinois; Harris County (Houston), Texas; and San Diego County and Orange County (outside Los Angeles), California.
In 66 of the 222 counties, average local wages are growing faster than rents, including in Maricopa County (Phoenix), Arizona; Dallas County, Texas; Clark County (Las Vegas), Nevada; Tarrant County (Fort Worth), Texas; and Hillsborough County (Tampa), Florida.
In over 90% of the nation, or 207 of the 222 counties analyzed, home prices are rising faster than wages, according to the report. These include Los Angeles County, Harris County, Maricopa County, San Diego County, and Orange County. In just 15 of the 222 counties (7%), average weekly wages are rising faster than median home prices.
Although rents have risen faster than home prices in roughly half the U.S. over the past year, average rents still require a significantly smaller portion of wages than major homeownership expenses. "What a difference a year makes," says Rick Sharga, executive vice president of market intelligence for ATTOM.
"Last year our study concluded that it was more affordable to own than to rent in 60% of the markets analyzed. But with mortgage rates doubling, monthly payments for new homeowners rose by 45% to 50% compared to a year ago, even though home price appreciation has slowed down dramatically. This has made renting more affordable in the majority of markets, despite rental rates continuing to rise over the past year."
For three-bedroom homes, average rents are increasing more than median prices for single-family homes in 103 of the 222 (46%) counties analyzed. However, average rents commonly consume a smaller percent of average wages compared with major homeownership expenses by anywhere from 5% to 30%. This trend is most pronounced in more populous urban areas.
The most populous counties where three-bedroom rents are rising faster than median sales prices for single-family homes include Cook County, San Diego County, Orange County, Kings County (Brooklyn), New York; and Miami-Dade County, Florida.
Los Angeles County, Harris County, Maricopa County, Dallas County, and Clark County are among the 119 counties where sales prices for single-family homes are rising faster than rents.
Additionally, in 46 counties with populations of at least 1 million, renting the average three-bedroom home is more affordable compared with owning a single-family home. The biggest affordability gaps between renting and owning include Honolulu, where rents consume 66% of average local wages and single-family ownership 140%; Alameda County (Oakland), California, at 47% renting versus 110% owning; Santa Clara County (San Jose), California, at 28% versus 83%; Orange County at 73% versus 125%; and Contra Costa County (outside San Francisco), California, at 49% versus 90%. Cook County is the only county with a population of more than 1 million where it is more affordable to buy than rent at 40% versus 38%.
The South and Midwest have both the most affordable rents for three-bedroom homes and homeownership. While difficult for average wage workers, the report shows that renting requires more than one-third of average local wages in 174 of the 222 counties (78%) analyzed. Of the 48 counties where average three-bedrooms rents require less than one-third of average local wages, 44 are in the Midwest and South.
The most affordable counties for three-bedroom rentals are Jefferson County (Birmingham), Alabama (20% of average local wages needed for rent); Pulaski County (Little Rock), Arkansas (23%); Cuyahoga County (Cleveland), Ohio (23%); Wayne County (Detroit), Michigan (24%); and Summit County (Akron), Ohio (25%). Among those with a population of at least 1 million, aside from Cuyahoga and Wayne counties, the most affordable counties for renting are St. Louis County, Missouri, at 25%; Allegheny County (Pittsburgh), Pennsylvania, at 26%; and Philadelphia County, Pennsylvania, at 26%.
Spread throughout the South, Northeast, and West, the least affordable counties for renting include Kings County (126% of average local wages needed to rent); Indian River County (Vero Beach), Florida (100%); Charlotte County (outside Fort Myers), Florida (84%); Monterey County (outside San Francisco), California (82%); and Riverside County (77%). In addition to Kings and Riverside counties, the least affordable rents for counties with a population of at least 1 million are Orange County at 73% of average local wages needed to rent; Palm Beach County (West Palm Beach), Florida, at 71%; and Westchester County (outside New York City), New York, at 69%.
In terms of homeownership, major expenses on a median-priced single-family home require more than one-third of average local wages (assuming 20% down) in 206 of the 222 counties (93%) analyzed. The most affordable markets to own in are Wayne County (24.1% of average local wages needed to own); Montgomery County, Alabama (27.6%); Cuyahoga County (27.7%); Richmond County (Augusta), Georgia (28.7%), and Allegheny County (29.2%).
For counties with a population of at least 1 million, aside from Wayne, Cuyahoga, and Allegheny counties, the most affordable for owning are St. Louis County (32.9% of average local wages needed to own) and Cook County (38.3%). The least affordable for counties with populations of at least 1 million include Honolulu County (139.8% of average local wages needed to own); Kings County (125.9%); Orange County (124.7%); Alameda County (110.1%); and Queens County, New York (102.6%).
The analysis for this report incorporated 2023 rental prices and 2022 home prices, collected from ATTOM's nationwide property database, as well as publicly recorded sales deed data licensed by ATTOM combined with average wage figures from the Bureau of Labor Statistics.