Renting is more affordable than owning a home in Austin
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It's cheaper to rent than purchase a home in Austin, according to a new report by real estate database company ATTOM.
Why it matters: Home prices continue to rise in the city, and the affordability gap is narrowing.
- Owning a median-priced home is more affordable than the average rent for a three-bedroom property in 58% of the U.S., per ATTOM's analysis.
- But in nearly 90% of the country, home prices are rising faster than wages, Axios' Jennifer Kingson reports.
There's a nationwide divide between cities and suburbs, though: Renting makes more sense in major metropolitan areas, while homeownership wins out in rural areas and suburbs, where property prices are lower.
- The intrigue: Central Texas bucks the norm. While renting is cheaper than buying in the Austin metro area — in line with national trends — renting remains more affordable in surrounding suburban counties, the report found.
- That's the case in Hays, Comal, Guadalupe, Kendall and Burnet counties — a sign of a booming population beyond Austin.
One big caveat: Renting may be cheaper, but rising rental prices make it unaffordable to many residents.
- Austin rents have spiked as much as 25% over the last year as the housing squeeze trickles down.
- The average 875-square-foot unit is going for roughly $1,500 a month.
Walter Moreau, executive director of Foundation Communities, said the group expects an average rent increase of about 3% in 2022, and something has to give.
- "We're very nervous about that because our expenses are going up 11%," Moreau said.
- "It is time for Facebook, Google, Apple, Tesla — and the others that are bringing tens of thousands of employees here at very high salaries — now is the time for them to make a difference and investment so that we don't end up like the Bay Area."
Of note: Comparing renting versus buying is difficult, Moreau added: "It depends on your income and how much of a mortgage you can afford. … On an individual basis, whether it's cheaper to buy or rent, comes down to a lot of personal factors."