After years of escalating home prices making the cost to purchase a home more expensive than renting in many of the nation’s largest counties, rising rents, lower mortgage rates, and moderating home prices made purchasing a home in Q4 2019 more attractive compared to last year. The move toward a more balanced equation is good news for home sellers as more potential buyers see purchase conditions improve and shift back into favoring buying. However, true relief from the nation’s housing affordability woes is not yet on the horizon. The cost to purchase a home is still more expensive than renting a home in 84 percent of the nation’s larger counties.
Q4 2019 Findings:
- The monthly cost to purchase the U.S. median home was $1,600 in the fourth quarter of 2019, compared to the median monthly rent of $1,319.
- On average, buying the median home accounts for 30 percent of the national median income, while renting accounts for 25 percent.
- 84% of the 593 U.S. counties analyzed still favor renting over buying in the fourth quarter of 2019.
- However, over the last year twenty-six of the 593 U.S. counties analyzed switched from being more affordable to rent to being more affordable to buy..
- Top areas where buying is more affordable than renting include Clayton County, GA (Atlanta Metro Area); Delaware County, IN (Muncie Metro Area); and Baltimore City, MD (Baltimore Metro Area).
At the end of the fourth quarter of 2019, the monthly cost* to buy the national median-priced home was $1,600 or 30 percent of the national median household income. This is right in line with the upper limit of the budgeting rule of thumb of spending no more than 30 percent of gross income on housing costs. However, the monthly cost to buy is down 1 percent from the same time last year when it was $1,658 and represented 31 percent of median household income. Meanwhile, the cost to rent increased by 4 percent from $1,254 to $1,319, with the cost in both years representing 25 percent of the median household income in that year.
Of larger counties with populations over 100,000, the monthly cost of buying a home is cheaper than renting in 16 percent of counties, up from 12 percent last year. Over this time period, 5 larger counties swapped from being more affordable to buy to being more affordable to rent:
- Randolph County, NC (Greensboro-High Point, NC metro area)
- Luzerne County, PA (Scranton-Wilkes-Barre-Hazelton, PA metro area)
- Craven County, NC (New Bern, NC metro area)
- Dauphin County, PA (Harrisburg-Carlisle, PA metro area)
- Wichita County, TX (Wichita Falls, TX metro area)
However, as home affordability improved due to lower interest rates over the past year, 26 counties switched from being more affordable to rent to being more affordable to buy. The largest 5 counties to switch were:
- Cuyahoga County, OH (Cleveland-Elyria, OH metro area)
- Bronx County, NY (New York-Newark-Jersey City, NY-NJ-PA metro area)
- Marion County, IN (Indianapolis–Carmel–Anderson, IN metro area)
- Camden County, NJ (Philadelphia-Camden-Wilmington, PA-NJ-DE-MD metro area)
- Richland County, SC (Columbia, SC metro area)
Where has the gap between renting vs. buying a home improved the most for purchasing a home?
Over the past year, many counties have seen the difference between the cost to purchase a home compared to the cost to rent a home improve toward favoring buying a home. The five counties below have seen the gap between renting and buying decrease the most over the past year.
| Rank | County | Median Listing Price | Median Listing Price Y/Y | Median Rent | Median Rent Y/Y | Percent of Income to Buy | Percent of Income to Rent |
| 1 | Santa Cruz, CA | $909,550 | 2% | $2,746 | 38% | 69% | 40% |
| 2 | Kings, NY | $807,050 | -9% | $2,135 | 2% | 81% | 42% |
| 3 | New York, NY | $1,680,545 | -1% | $2,135 | 2% | 117% | 30% |
| 4 | Hawaii, HI | $429,550 | -10% | $1,557 | 16% | 39% | 30% |
| 5 | Flagler, FL | $299,950 | -6% | $1,310 | 17% | 34% | 29% |
Santa Cruz County, CA; New York County, NY; and Kings County, NY; are among the nation’s most expensive markets, with median listing prices ranging between 169 percent and 460 percent higher than the nation’s median listing price of $300,000. Hawaii County, HI, while not among the country’s most expensive markets, still has a median listing prices that are 43 percent higher than the nation’s median listing price. Flagler County, FL is the only market in the most improved markets that is priced in line with the national rate.
Despite high home prices in four of these five counties, home-buying conditions have improved over the past year, decreasing the affordability gap between renting vs. buying. Listing prices in New York County, NY; Kings County, NY; Hawaii County, HI; and Flagler, FL; have decreased between 1 and 10 percent over the past year. In Santa Cruz County, CA, slow median price growth was outpaced by very strong growth in median rents, which increased by 38 percent over the past year.
Where is purchasing a home favored?
In the 10 larger counties below, the difference between the share of income to buy a home and rent a home most strongly favored buying at the end of the fourth quarter. Median listing prices in these counties were on average 53 percent lower than the national median listing price of $300,000, while median rents, although still less expensive, were only 11 percent cheaper on average.
| Rank | County | Percent of Income to Buy | Percent of Income to Rent |
| 1 | Clayton, GA | 18% | 32% |
| 2 | Baltimore city, MD | 23% | 35% |
| 3 | Cumberland, NJ | 21% | 32% |
| 4 | Richmond, GA | 17% | 28% |
| 5 | Vigo, IN | 12% | 22% |
| 6 | Wayne, MI | 18% | 27% |
| 7 | Muscogee, GA | 20% | 28% |
| 8 | Cambria, PA | 11% | 19% |
| 9 | Hampton city, VA | 22% | 30% |
| 10 | Jefferson, NY | 24% | 31% |
Where is renting a home favored?
In the 10 larger counties below, the difference between the cost to buy a home and rent a home most strongly favored renting at the end of the fourth quarter. Median listing prices in these counties were on average 260 percent higher than the national median of $300,000. Median rents, while also more expensive, were only 79 percent more expensive on average.
| Rank | County | Percent of Income to Buy | Percent of Income to Rent |
| 1 | New York, NY | 117% | 30% |
| 2 | Santa Barbara, CA | 116% | 38% |
| 3 | Monterey, CA | 90% | 31% |
| 4 | San Mateo, CA | 77% | 31% |
| 5 | San Francisco, CA | 79% | 33% |
| 6 | Marin, CA | 77% | 33% |
| 7 | Napa, CA | 69% | 28% |
| 8 | Los Angeles, CA | 77% | 36% |
| 9 | Kings, NY | 81% | 42% |
| 10 | Maui, HI | 64% | 30% |
Notes on Methodology
*Purchase and rent costs reflect current costs and do not take into account holding period, price and rent appreciation, and inflation. Purchase costs do include taxes and insurance and are calculated based on realtor.com county-level residential listing price data and mortgage rate data for December 2019. Rental prices are from the U.S. Department of Housing and Urban Development (HUD) data for 2019 50th-percentile rent estimates. Household income data and home-ownership data are from Census Housing Vacancies and Home-ownership data and 2019 Claritas estimates are based on Census data. Only counties with populations of 100,000 or greater are included in the top lists in this analysis.
Source: Realtor.com
Photo credits to the owner