Considering buying a home? It may be cheaper to rent, according to a new study.
While buying a home in most markets results in lower monthly housing payments, in the nation's most populated counties — such as Harris County, which includes the Houston area — renting is the more affordable option, according to real estate analytics company Attom Data.
"(There) are distinct differences between different places, depending on the size and location from core metro areas," Todd Teta, Attom's chief poduct officer, said in a statement.
Teta said both buying and renting are straining the budgets for many throughout the country. But in Harris County, wages have increased more quickly than rents. Home prices, on the other hand, have risen so rapidly that monthly payments on a median-priced home — $251,000, according to the Houston Association of Realtors — would be more than the median rent for a three-bedroom rental.
George Ratiu, an economist at real estate listing company Realtor.com, said growing housing costs are taking up so much of American's budgets, he is concerned it could hurt consumer spending — which accounts for 70% of America's economic activity — in 2020.
Attom's findings fell in line with an analysis by economists at Florida Atlantic University. The Beracha, Hardin & Johnson Buy vs. Rent Index compares the return on the purchase of a house against renting a similar-quality home and investing downpayment money in stocks and bonds. Recent numbers suggested renting in Houston makes more sense than buying than in any other market in the country.
In Attom's study, the company compared federal data for the median price of renting a three-bedroom home to the median wage. It used its own data for median home prices and assumed a homebuyer put 3% down on the home, which would result in highly monthly mortgage payments and the need for mortgage insurance.
