If you are a relocating employee...rent or buy?

"To own or to rent?" It's a question that has to be considered every time someone relocates. If someone is a homeowner in their departure location, they may not be able to buy a new home in their destination, even when provided some additional benefits. In ATTOM's latest 2023 Rental Affordability Report, they show that the average three-bedroom rent is more affordable than owning a comparably sized median-priced home in 210, or 95 percent, of the 222 U.S. counties analyzed for the report. 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 (see full methodology below).  

Rick Sharga, executive vice president of market intelligence for ATTOM, notes that “last year our study concluded that it was more affordable to own than to rent in 60 percent of the markets analyzed. But with mortgage rates doubling, monthly payments for new homeowners rose by 45-50 percent compared to a year ago, even though home price appreciation has slowed down dramatically. This has made renter more affordable in the majority of markets, despite rental rates continuing to rise over the past year.”

Interestingly, the oxymoron here is that rents are rising faster than home prices in half of the United States. In the most populous areas in the country, the gap between renting and owning is largest. The biggest gaps among counties in the report with populations of less than 1 million are in San Mateo County, CA (outside San Francisco) (average three-bedroom rents consume 39 percent of average local wages while single-family home ownership expenses consumes 103 percent); Alexandria City/County, VA (outside Washington, DC) (46 percent versus 101 percent); Loudoun County, VA (outside Washington, DC) (44 percent versus 97 percent); San Francisco County (41 percent versus 92 percent) and Utah County (Provo), UT (37 percent versus 84 percent). 

This Insider article shared that coming into 2023, predictions were that rents would be expected to grow more than home prices, but that mortgage rates would still make buying more challenging for renters to switch over. For renters, a 6.3% increase in rent is not ideal, but the alternative might be worse. Which city is the most expensive for renters? The answer might surprise you. And this CNN article explains while renting in 45 of the 50 largest cities in the US is cheaper, there are 5 where that is not true.

Five markets of the top 50 cities that favor homeownership over renting in December 2022

1. Memphis, Tennessee
2. Pittsburgh, Pennsylvania
3. Birmingham, Alabama
4. St. Louis, Missouri
5. Baltimore, Maryland

Across the country, rents are still soaring. Places like NYC, LA, the Bay Area, and Washington D.C. can be especially challenging. Even Maxwell Frost, the first Gen Zer elected to Congress, is struggling to rent an apartment in Washington, D.C. Relocating employees today (maybe more than ever) need as much help as possible to work through their new area and to consider the options available to them when considering buying or renting!