Home buying in 2023
For most people, affordability is the biggest barrier to homeownership.
Nobody wants to end up house poor and saving can be difficult. Before buying property, borrowers try to figure out how much they can afford, what’s a good mortgage rate, and whether or not they should wait. Renting is typically seen as a cheaper alternative.
However, that’s not always true. Where you buy matters and many markets have lower average purchase costs than rent payments.
Verify your home buying eligibility. Start hereAffordable housing markets
Between home value appreciation and rapid mortgage rate growth, borrower affordability took a hit over the last few years. But conditions have shifted closer to the buyer’s side of the spectrum, with prices expected to temper and interest rates trending downward.
Whether to buy vs rent is an age-old question, giving way to a multitude of factors. While there isn’t a one-size-fits-all answer since everyone’s situation is different, owning a home builds equity and, in turn, personal wealth.
In many cases, price is the main determinant in making this decision and it’s less expensive to buy a house instead of renting in some of the country’s biggest markets.
A report from Attom Data Solutions gathered information from the 222 most populous U.S. counties. It compared the rental and purchasing costs of 3-bedroom units (assuming a 20% down payment, average mortgage rates, property taxes and homeowner’s insurance), against the average wages in each area.
By and large, the most affordable places for buyers came across the Midwest and South.
The cheapest housing markets to buy vs rent a home
The chart below shows the top-12 counties that require the lowest share of the average local wage to own the median-priced home.
Noncoincidentally, 10 of the dozen were among the cheapest markets in the country, boasting median sales prices under $200,000.
| County, State | Metro area | Home payment share of average wages | Median home sales price, Jan-Nov 2022 | Rent payment share of average wages | Average rent, Jan 2023 |
| Wayne, Michigan | Detroit | 24.1% | $ 145,000 | 24% | $ 1,350 |
| Montgomery, Alabama | Montgomery | 27.6% | $ 141,636 | 25% | $ 1,150 |
| Cuyahoga, Ohio | Cleveland | 27.7% | $ 173,469 | 23% | $ 1,300 |
| Richmond, Georgia | Augusta | 28.7% | $ 150,000 | 27% | $ 1,250 |
| Allegheny, Pennsylvania | Pittsburgh | 29.2% | $ 200,000 | 26% | $ 1,575 |
| Jefferson, Texas | Beaumont | 29.3% | $ 172,974 | 28% | $ 1,450 |
| Summit, Ohio | Akron | 29.9% | $ 162,225 | 25% | $ 1,150 |
| Shelby, Tennessee | Memphis | 30.4% | $ 195,000 | 25% | $ 1,395 |
| Jefferson, Alabama | Birmingham | 30.5% | $ 190,000 | 20% | $ 1,095 |
| Montgomery, Ohio | Dayton | 30.6% | $ 167,000 | 25% | $ 1,150 |
| Hamilton, Ohio | Cincinnati | 31.9% | $ 214,900 | 26% | $ 1,500 |
| Pulaski, Arkansas | Little Rock | 31.9% | $ 182,500 | 23% | $ 1,095 |
Where home buying is cheaper than renting
The table below shows the counties where monthly homeowner payments are lower than rents. Cook County, Ill., is the only county in the nation with a population above 1 million that provides buyers with better affordability than renters.
| County, State | Metro area | Home payment share of average wages | Median home sales price, Jan-Nov 2022 | Rent payment share of average wages | Average rent, Jan 2023 |
| Mercer, New Jersey | Trenton | 35.9% | $ 300,000 | 41% | $ 2,800 |
| Jefferson, Louisiana | New Orleans | 38.2% | $ 237,000 | 40% | $ 2,000 |
| Cook, Illinois | Chicago | 38.3% | $ 310,000 | 40% | $ 2,550 |
| Camden, New Jersey | Philadelphia | 39.0% | $ 259,900 | 45% | $ 2,350 |
| Burlington, New Jersey | Philadelphia | 44.3% | $ 318,900 | 45% | $ 2,500 |
| New Haven, Connecticut | New Haven | 44.9% | $ 320,000 | 50% | $ 2,700 |
| Gloucester, New Jersey | Philadelphia | 46.5% | $ 272,500 | 54% | $ 2,400 |
| Atlantic, New Jersey | Atlantic City | 49.3% | $ 301,840 | 59% | $ 2,700 |
| Indian River, Florida | Sebastian | 57.5% | $ 355,000 | 100% | $ 4,500 |
| Lee, Florida | Cape Coral | 64.3% | $ 415,000 | 65% | $ 2,985 |
| Charlotte, Florida | Punta Gorda | 64.7% | $ 365,500 | 84% | $ 3,400 |
| Sarasota, Florida | North Port | 66.5% | $ 449,088 | 73% | $ 3,500 |
Where to buy vs rent: Additional report findings
Overall, median home price growth outpaced average rent growth for 3-bedroom units in 54% or 119 of the 222 counties surveyed.
Bigger populations typically result in lower home buyer affordability, due to higher demand than available supply. The largest counties where home sales prices grew faster than rental prices included Los Angeles County, Calif., Harris County, Texas (the Houston metro area), Maricopa County, Ariz., (Phoenix), Dallas County, Texas, and Clark County, Nev., (Las Vegas).
Conversely, 18 counties had year-over-year median home price appreciation rates below 5%. The lowest came in the counties of Washington, D.C. at -2.5%, then San Francisco at -0.8% and Montgomery, Ala., at 1.2%.
What are today’s mortgage rates?
After more than doubling over the course of 2022, mortgage rates are expected to decrease as inflation continues to come down. Declining interest rates will help borrower affordability in the coming year.
If you’re trying to overcome financial obstacles to homeownership, the notion that you need to save for a 20% down payment is outdated. Plenty of lending programs exist that require little-to-no money down, especially if you’re a first-time home buyer.
If you’re in the market to buy a house, reach out to a local mortgage lender to see what loan types and interest rates you’re eligible for.
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