Is it cheaper to rent or buy in today’s Triangle market? Here’s the answer.
With rising rents, higher home values (and tax rates) and a chronic housing shortage, both renting and buying a home pose significant financial strains for the average family in the Triangle.
But new data suggests that renting is still cheaper than buying.
According to a report from ATTOM, a real estate data company, renting a three-bedroom home today is more affordable than buying one in the Triangle’s three largest counties — Wake, Durham and Johnston. (Orange and Chatham counties were not included in the study.)
In the Triangle, housing costs consume more than one-third of wages in the vast majority of all three counties. Some of those households may face even steeper costs in the coming months when Wake County’s 2024 revaluation gets implemented.
That situation mirrors a national trend.
Renting is cheaper than owning in nearly 90% of local markets, the report said. That extends trends from 2023 “even as rents have commonly risen faster than home prices” around the U.S. over the past year.
“Continuously increasing home prices contribute to the escalation of rental costs,” said Rob Barber, CEO at ATTOM, in a release.
That makes “both buying and renting properties a challenging endeavor.”
Breaking down the numbers
While it’s cheaper to rent than own in Wake, Durham and Johnston counties, metrics vary.
The widest affordability gap is in Wake, according to the report.
In 2024, the median rent for a three-bedroom home is $1,995, and the median home price is $480,000. So rent takes up 34% of the county’s weekly wages — $1,369 — while buying takes up a whopping 57.9%.
In Durham, the median rent is $1,995, and the median home price is $398,000. So rent takes up 28% of the county’s weekly wages — $1,650 — while buying takes up 39.9%.
In Johnston, the median rent is $1,800, and the median home price is $325,000. So rent takes up 44% of the county’s weekly wages — $943 — while buying takes up 55.7%.
“Home prices are rising faster in Durham, whereas rents are rising faster in Wake,” ATTOM’s analyst Jennifer Von Pohlmann said in an email to The N&O. “Luckily, wages are also rising faster than rents and home prices in Durham.”
In contrast, rents and home prices are rising faster than wages in Wake, she said.
In Johnston, wages are rising faster than home prices and rent prices.
ATTOM analyzed 2024 rental prices and 2023 home prices, collected from its nationwide property database and publicly recorded sales deed data licensed by ATTOM. The report also incorporated average wage figures from the Bureau of Labor Statistics.
Interpreting the data
While it’s tempting to focus solely on the short-term affordability of renting, and the higher upfront costs of owning, it’s crucial to consider other factors, said Jon McBride, a Realtor at Coldwell Banker Howard Perry Walston and also a member of the Raleigh Regional Association of Realtors.
“Buying a home is a long-term investment that can lead to substantial wealth accumulation, especially in a market that has consistently seen price appreciation,” he said.
“It also offers long-term stability. Standard mortgages can lock in rates for 30 years. [That] contrasts sharply with the annual rent increases most tenants face.”
In the face of a longstanding supply shortage and a strong influx of in-migration, most experts don’t expect prices to budge much. It’s likely that prices will either continue to go up or stay, but not decline, they say.
“The lack of affordable housing will continue to be an obstacle in our market for years to come, both for those looking to purchase or rent,” said Maya Galletta, Realtor at RE/MAX Legacy.
Would-be buyers must explore all their options, she said.
“Their purchasing power is not going to get any better by waiting unless their income outpaces home prices and inflation,” she said. “It’s not always the right time to buy for everybody. [But] continuing to pay rent, whether that be less expensive than buying, will likely result in continuing to rent.”
This story was originally published February 5, 2024 at 8:00 AM with the headline "Is it cheaper to rent or buy in today’s Triangle market? Here’s the answer.."
