Rent vs. Buy: The Best Places to Become Homeowners—or Remain Renters

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The most important question for many potential home buyers isn’t about the quality of the local school districts, whether mortgage interest rates will fall, or commute times. Instead, it’s whether it makes more financial sense to just keep renting, rather than sinking money into the purchase of a home. And it all depends on where you live.

In more than 8 out of 10 counties, 84%, it was cheaper to rent than to buy in the fourth quarter of 2019, according to a recent realtor.com® report. In the past year, it has become better to buy in 26 counties—in part because mortgage rates have dropped under 4% in that time.

The economics team at realtor.com analyzed the 593 counties with at least 100,000 residents where sufficient data was available to come up with its quarterly Rent vs. Buy report. It looks at the percentage of income required to rent and to purchase a home, using listing, rental, homeownership, mortgage, and income data.

“Renting remains the more affordable option in a lot of the country,” says Senior Economist George Ratiu of realtor.com. “However, due to declining mortgage rates, we are seeing buying becoming more financially attractive.”

Smaller counties in the Midwest and South tend to offer lower-priced real estate and a cheaper cost of living than the big cities along the coasts. That’s because land and construction labor are less expensive and there are fewer zoning regulations. Plus, there isn’t as much demand for a limited supply of homes in smaller and midsize cities and the surrounding suburbs and exurbs.

Meanwhile, New York City and ultrapricey (and scenic) California counties on the water dominated the list of the highest-priced counties where it makes more sense to rent. These places tend to have lots of good-paying jobs, lively social scenes, and natural beauty. Six of them had median list prices over $1 million.

“Affordability is driven by geography,” says Ratiu. The most expensive markets have “solid economies and strong job growth, which is very attractive to young professionals. The trade-off is that it’s much more difficult to get a foothold in homeownership.”

So where are the best places to purchase a home, or to rent one?

The best counties to buy a home

1. Clayton, GA  ($154,500 median list price)
2. Baltimore City, MD ($167,500)
3. Cumberland, NJ ($142,450)
4. Richmond, GA ($125,50
5. Vigo, IN ($89,050)
6. Wayne, MI ($127,050)
7. Muscogee, GA ($151,550)
8. Cambria, PA ($79,950)
9. Hampton City, VA ($193,00)
10. Jefferson, NY ($162,500)

The best counties to rent a home

1. New York, NY ($1,680,550 median list price)
2. Santa Barbara, CA ($1,395,050)
3. Monterey, CA ($1,000,050)
4. San Mateo, CA ($1,643,050)
5. San Francisco, CA ($1,499,300)
6. Marin, CA ($1,383,550)
7. Napa, CA ($995,050)
8. Los Angeles, CA ($866,550)
9. Kings, NY (Brooklyn) ($807,050)
10. Maui, HI ($960,050)

The post Rent vs. Buy: The Best Places to Become Homeowners—or Remain Renters appeared first on Real Estate News & Insights | realtor.com®.

source https://www.realtor.com/news/trends/rent-vs-buy-the-best-places-to-become-homeowners-or-stay-renters/