Buying a Home is more Affordable than Renting in most of the U.S

By Taff Weinstein at

Buying a Home is more Affordable than Renting in most of the U.S

In the newly released ATTOM Data Solutions 2020 Rental Affordability Report, it shows that owning a median-priced, three-bedroom home is more affordable than renting a three-bedroom property in 455, or 53 percent, of the 855 U.S. counties analyzed for the report.

However, the analysis shows a split between different-sized markets, with ownership more affordable mainly in lightly populated counties and renting more affordable in more populous suburban or urban areas.

“Home ownership is a better deal than renting for the average wage earner in a slim majority of U.S. housing markets. However, there are distinct differences between different places, depending on the size and location from core metro areas,” said Todd Teta, chief product officer with ATTOM Data Solutions. “For sure, either buying or renting is a financial stretch or out of reach for individual wage earners throughout most of the country in the current climate. But with interest rates falling, owning a home can still be the more affordable option, even as prices keep rising.”

Counties with a population of at least 1 million, where buying a home is more affordable than renting, were Miami-Dade County, FL; Broward County, FL; Wayne County (Detroit), MI; Philadelphia County, PA; Hillsborough County (Tampa), FL; Cuyahoga County (Cleveland), OH and Allegheny County (Pittsburgh), PA.

What Happened to Rates Last Week?

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Mortgage backed securities (FNMA 3.000 MBS) gained just +5 basis point (BPS) from last Friday's close which caused fixed mortgage rates to remain at the same levels compared to the prior week.

Overview: Overall, we had another week of very solid economic data with strong readings in the Services and Labor sectors which would normally be negative for mortgage rates. But, more that offsetting the strong economic data was geo-political concern which drove up demand for U.S. long bonds and helped to keep mortgage rates low for yet another week.

Jobs, Jobs, Jobs: We had Big Job's Friday! You can read the official BLS report here.

Tale of the Tape:
Jobs:
December Non Farm Payrolls increased by 145K which was below estimates of 164K.
November NFP revised lower from 266K down to 256K.
October NFP revised lower from 156K down to 152K.
The rolling 3 month average is now a respectable 184K.

Wages:
The average hourly rate increased by 3 cents to $28.32
Average Hourly Earnings MOM increased by 0.1% vs est of 0.3%
Average Hourly Earnings YOY increased by 2.9% vs of 3.1%
Employment:
The Unemployment Rate remained at 3.5%
The Participation Rate remained at 63.2%
The U6 Unemployment Rate dropped from 6.9% down to 6.7%

Geo-Political: On the U.S./Iran/Iraq front, we had a few developments that "spooked" bonds. First, is the fact that Iran once again attacked U.S. military installations just North of Baghdad with rocket(s).  Secondly, it was confirmed that the Ukrainian 737/800 jet was downed by an Iranian missile.  The vast majority of the passengers were Canadian (there were no U.S. passengers).  It very well may have been struck down in error by Iran but none-the-less it is an issue.

Services: ISM Non Manufacturing PMI for December hit 55.0 vs est of 54.5.  This represents more that 2/3 of our economic output, any reading above 50.0 is expansionary, its the best reading since August

Factory Orders: November orders shrank by -0.7% but that was actually better than market

What to Watch Out For This Week:

The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

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