Looking for a three-bedroom home in the Tri-Cities. It’s cheaper to buy than rent in Sullivan, Hawkins and Carter counties, but the dynamic has shifted to renting in Washington County. At the same time rents in all the counties except Washington are rising faster than wages, so it’s anyone’s guess on how long the current buy option remains dominate.
Attom Data Solution’s 2019 Rental Affordability Report moved Washington into the renter category even though rents are rising faster than wages in the other counties. The report also said home prices are increasing faster than wages in Carter and Sullivan counties.
The analysis factors the relationship of rents, home prices and wages for the rent/buy option (full methodology is at the bottom of this report). And that creates what looks like some contradictions. For instance, the three-bedroom rent in Washington and Carter counties is $928, but it’s cheaper to buy in Carter because the average cost to buy is less than it is in Washington when you crunch all the numbers.
The average rent in Sullivan and Hawkins is $958. Home prices are increasing faster than wages in Sullivan while wages have the upper hand on increases in Hawkins counties.
Nationwide renting is clearly becoming more the more attractive option in the volatile housing market said Jennifer von Pohlmann, content director for Attom. When you factor in the number of apartments coming online in the Tri-Cities the description of a volatile more competitive housing market takes on a local look.
According to Attom’s analysis, average fair market rents rose faster than average weekly wages in 52% of the 755 counties analyzed while average wages rose faster than rents in 48% of the counties. Home prices were rising faster than wages in 80% of counties while home prices were rising faster than rents in 70% of the markets.
Average wage earners in both Washington and Sullivan counties have the buying power to get a median-priced home, according to Attom’s Home Price Index released late last year. They were among the five of 13 state counties with that affordability status.
The most current Census data shows 30% of the occupied households in Sullivan were rentals while 36% were rentals in Washington County. That is steadily increasing for several reasons. That’s a concern because almost half of the local renters pay between more than the 30% that’s recommended for housing cost. Some pay more than 50%. One concern is the more people spend on rent the less disposable income they have for other purchases.
As cited by Attom’s report home prices and rents are increasing, and there are more apartments, condo and apartment rentals coming onto the market as investors position themselves to cash in on the rental trends. At the same time, new home construction has slowed and the average price to get into one of them is above the $200,000 range.
Although rents vary widely the Department of Housing and Urban Development’s 2019 fair market rents offer an idea of the changing dynamics. Since the fair market rents are used to determine payment standard amounts for HUD’s housing voucher program, in many instances they are lower than the market rates for an apartment, condo, and single-family rentals.
Here’s how the current fair market rents look in the region two largest counties and the rate increase from last year:
- 1 bedroom, $534, up 4.25%.
- 2 bedroom, $689, up 3%.
- 3 bedroom $863, up 2.4%.
- 4 bedroom $980, up 0.4%.
- 1 bedroom $529, up 3%.
- 2 bedroom $700, up 2.3%.
- 3 bedroom $924, up 2.3%.
- 4 bedroom $1,015 up 3.4%.
For the Rental Affordability Report, Attom looked at 50th percentile average rental data for three-bedroom properties in 2018 from the U.S. Department of Housing and Urban Development, along with Q2 2018 average weekly wage data from the Bureau of Labor Statistics (most recent available) and January-November (YTD) 2018 home price data from ATTOM Data Solutions publicly recorded sales deed data in 755 counties nationwide.
Rental affordability is average fair market rent for a three-bedroom property as a percentage of the average monthly wage (based on average weekly wages). Home buying affordability is the monthly house payment for a median-priced home (based on a 3 percent down payment and including mortgage, property tax, homeowner’s insurance, and private mortgage insurance) as a percentage of the average monthly wage.