With rents continuing to outpace wages and home prices rising even faster than rents, “renters in 2016 will be caught between a bit of a rock and a hard place,” said RealtyTrac Vice President Daren Blomquist in discussing the company’s 2016 Rental Affordability Analysis.
According to the report released today, buying a home is actually more affordable than renting in more than half, or 58 percent, of the country’s markets. Rents are outpacing weekly wage growth in 57 percent of markets, and home price appreciation is outpacing rent growth in 55 percent of markets.
Average weekly wages in the second quarter of this year were up 2.6 percent from the same period last year, while median home prices in the third quarter increased 5 percent compared to last year.
Rents are forecast to increase 3.5 percent next year, RealtyTrac said. Average wage earners will need to spend at least 37 percent of their income on rents for three-bedroom properties in 2016, but slightly less than 38 percent of their income on mortgage payments — assuming a 3-percent downpayment and including mortgage, taxes, insurance and mortgage insurance — on a median priced home.
“2016 may be a good time for some renters to take the plunge into homeownership before rising prices and possibly rising interest rates make it increasingly tougher to afford to buy a home,” Blomquist said.
Buying is more affordable than renting in 291 counties, including counties in Chicago, Phoenix, Miami, the Inland Empire of Southern California, Las Vegas and Detroit.
Markets with the biggest increase in rents are:
- Sumter, South Carolina
- Burlington and Goldboro, North Carolina
- Houma-Thibodaux, Louisiana
- Missoula, Montana
Larger markets seeing the biggest rent increases are Santa Clara and San Diego, California; Austin and San Antonio, Texas; and Chicago.
Renting is more affordable than buying in only 42 percent of the counties that RealtyTrac analyzed, including counties in Los Angeles, Houston, San Diego, New York City (Brooklyn) and Dallas.
Markets seeing the biggest decrease in rents are counties in:
- Johnson City, Tennessee
- Abilene, Texas
- California-Lexington Park, Maryland
- Ithaca, New York
- Roseburg, Oregon
Large markets seeing the biggest rent decreases are Long Island, New York; Las Vegas; and Sacramento and San Francisco, California.
