Rent or buy a house in 2019? This age-old question might have an easy answer in many cities across the US housing market according to a report released by Attom Data Solutions. And while future homebuyers may not rejoice, real estate investors of rental properties might just be happy to hear the news.
The 2019 Rental Affordability Report
The report took a look at 755 US counties and analyzed affordability using fair market rental data from the U.S. Department of Housing and Urban Development along with wage data from the Bureau of Labor Statistics. It was found that, in 442 counties (59%), renting a 3 bedroom house is more affordable than buying a median-priced property.
Among these counties are 18 with the highest population in the nation and 37 (of 40) counties with a population of 1 million or greater. It’s become more affordable to rent than to buy a house in 2019 in counties such as:
- Los Angeles County, California
- Cook County (Chicago), Illinois
- Harris County (Houston), Texas
- Maricopa County (Phoenix), Arizona
- San Diego County, California
Other locations include counties in:
- New York City
- Las Vegas
- San Jose
- San Francisco
This is not surprising considering the real estate market trends of the last few years that are carrying on into 2019:
- Home prices are increasing at a much faster pace than rental rates in 70% of the studied markets.
- US annual real estate appreciation averages at 6.7% while rental rates increase by 3.5%.
- Home prices are unaffordable compared to wages in 80% of the analyzed counties.
The combination of all of this is naturally pushing many to continue renting rather than buy a house in 2019.
The 3 counties with a population of 1 million or more where residents are likely to be able to afford to buy a house in 2019 according to the report are:
- Wayne County (Detroit), Michigan
- Philadelphia County, Pennsylvania
- Cuyahoga County (Cleveland), Ohio
What This Means for Real Estate Investors in 2019
If you are a real estate investor looking to buy a house in 2019 to rent out, this might be a good year to do so. That’s because as affordability becomes an issue for homebuyers, rental property demand increases. While home prices outpace them, rental rates are still high in these same real estate markets.
To start looking for and analyzing the best rental properties in the US housing market, click here.
Keep in mind that with the real estate market trends found in the report, it’s best to apply a buy and hold real estate investment strategy if you buy a house in 2019. That way, you can benefit from cash flow from the rental income and avoid having an investment property for sale on the market for too long as homebuyers are priced out of many markets.
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