Editor’s Note: Each Friday, WRAL TechWire takes a deep dive into the Triangle’s real estate markets. That includes stories on how to win in the Triangle real estate market as a buyer and how sellers can prepare a home for sale in order to get top-dollar offers. And even though the recent decline in Raleigh rent prices isn’t likely to last, today’s report tracks why it might still be more affordable to rent than to buy.
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RALEIGH – Both renting or owning a three-bedroom home can be a significant financial burden for many households across the Triangle and the nation, according to a new study released this week by ATTOM Data Solutions. But…
Average rental prices still require a “significantly smaller portion of wages” than all the expenses associated with homeownership of such properties, the study notes.
And that includes both Wake County and Durham County, where it is more affordable, on average, to rent a three-bedroom property than to buy one, according to the ATTOM data set.
Raleigh rents are falling, but that trend is not likely to last
What’s happening
In Wake County, the data shows that a typical rental price for a 3-bedroom rental property is now $1,900 per month. That’s up 3% from a year ago, according to ATTOM. But despite that increase, it’s still better, on average, to rent than to buy.
That’s because buying the median priced three-bedroom home in Wake County using financing at existing mortgage interest rates with a 20% down payment would require more of a household’s income, the study found. And home prices rose 16.3% in a one-year period in Wake County, ATTOM found.
So while renting a home would come with costs of 33% of typical income, buying that home or one similar would cost 58.3% of typical income in Wake County.
In Durham County, rents rose 13% year-over-year for three-bedroom properties, and are now $1,950 per month. But home prices rose faster than rent prices in Durham County, as well, at a rate of 16.7%.
So while a rental in Durham County would cost 29% of a household’s income, homeownership of that property or a similar one in the area would cost 43.4%, according to the study.
There is some good news for Wake County residents considering whether to rent or to buy: Wages are currently rising faster than rental prices in the county. But the opposite is true in Durham County, according to ATTOM.
Triangle housing tug of war: Buyers, sellers will do battle in a more costly market
There are benefits to buying, too
But this doesn’t mean that buying a home is a bad choice, especially given the long-term benefits of homeownership, said Dr. Mike Walden, an economist and contributor to WRAL TechWire.
“While the study indicates upfront and monthly costs of renting may be less than buying now, it overlooks the long-term benefits of buying,” said Walden.
The largest such benefit of buying, according to Walden, is the long-term appreciation in home prices.
“Especially in the Triangle market with its tremendous past and predicted growth, home-owning should be one of the best investments a household can make,” Walden said.
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WRAL TechWire reporter Jason Parker, who is also a licensed North Carolina real estate agent, works with journalists from WRAL.com to track and present market data and report on how people are experiencing the region’s changing real estate markets. These special reports will use the category tag “Triangle Real Estate” or “Triangle Real Estate Market.
