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To Buy or to Rent? Depends Where You Are, Says Analyst

Credit: iStock

by Dana Gentry, Nevada Current
January 19, 2023

Renting a three-bedroom home is more affordable than owning a comparably sized median-priced home in 95% (210 out of 222) of the largest U.S. counties, which were included in a study by ATTOM, a real estate data analyst.  Just a year ago, it was more affordable to own than to rent in 60% of the locations surveyed.  

“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,” says the report. “This has made rent more affordable in the majority of markets, despite rental rates continuing to rise over the past year.”

Last year, the cost of a three-bedroom rental in Clark County was down slightly (.3%) from 2021, and ate up 41% of the average local wage. Owning a home in Clark County consumed 66.2% of local wages. The median price of a home in Las Vegas in December 2022 was $425,000, according to Las Vegas Realtors. 

The average weekly wage last year in Southern Nevada was $1,127, up from $1,072 in 2021.

In Washoe County, the average rent in 2022 was $2,395, about the same as in 2021, and consumed 46% of local wages, which amounted to $1,197 a week in 2022, up from $1,148 in 2021. By contrast, home ownership in Washoe took up 77.4 percent of the average wage. The median price of a home in December was $519,950.

According to the report, rents are rising faster than median sale prices in Cook County (Chicago), IL; San Diego County, CA; Orange County, CA (outside Los Angeles); Kings County (Brooklyn), NY, and Miami-Dade County, FL.

Home ownership is least affordable in the West, the report says. 

Home prices are rising faster than rents in Los Angeles County, CA; Harris County (Houston), TX; Maricopa County (Phoenix), AZ; Dallas County, TX, and Clark County (Las Vegas), NV.

Mortgage rates on Thursday reached the lowest point since September, and mortgage applications surged with a 30-year fixed loan available at 6.15%, down from 6.33% the previous week, according to mortgage buyer Freddie Mac. 

With more homes on the market and sellers increasingly willing to lower prices because of competition, national experts are forecasting a potential sweet spot for would-be buyers. 

But in Southern Nevada, the expected surge of inventory that usually occurs after the holiday has yet to materialize, says Diane Varney of Coldwell Banker. 

“We definitely do anticipate seeing the rate changes get some of the people off the fence,” she says. “What I can tell you is buyers are paying so much money in interest, they don’t have the cash to make repairs and fix things up. If it’s not in good, move-in condition, sellers are going to have a hard time because buyers don’t have the financial wherewithal to tolerate that.”

Nevada Current is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Nevada Current maintains editorial independence. Contact Editor Hugh Jackson for questions: info@nevadacurrent.com. Follow Nevada Current on Facebook and Twitter.