Real Estate News reports that after careful examination of where American money buys the most value and where there is a good supply of affordable housing, a mix of South, East, and Midwest markets rise on the charts with Atlanta being at the very top for the area where buying is almost certainly better than renting.
Chief economist Jonathan Smoke said that a lack of natural barriers allows for new construction and helps to keep supply in balance with demand created by strong population growth over the past several decades. Though Atlanta’s economy, which is more dependent on housing and new construction than many other markets, suffered during the recent recession, it began to show substantial recovery last year. Outskirts have plenty of new homes, and parts of Atlanta continue to offer “fixer-upper” opportunities for potential homeowners.
Factors that support the report’s findings include median incomes, median home values, and fair market rental data from the U.S. Department of Housing and Urban Development. The data scientists assumed current rates for a 30-year fixed-rate mortgage, that a buyer would make a 20% down payment, and that costs of homeownership (mortgage, insurance, taxes) would not exceed 28% of the buyer’s income. From these assumptions, the data team established a “maximum affordable price” for each market in the study. Finally, the team calculated the number of available homes in each market that fell under the “maximum affordable price” to determine the markets with the most smart buys.
The national winner was the Atlanta–Sandy Springs–Roswell, GA area! We were followed by Chicago-Naperville-Elgin, IL-N-WI; Philadelphia-Camden-Wilmington, PA-NJ-DE-MD; Detroit-Warren-Dearborn, MI; Tampa-St. Petersburg-Clearwater, FL; St. Louis, MO-IL; Pittsburgh, PA; Cincinnati, OH-KY-IN; Indianapolis-Carmel-Anderson, IN; Virginia Beach-Norfolk-Newport News, VA-NC. The West is generally more expensive and saw higher price increases due to population and household growth.
Renters saw the best value, according to the report, from the Midwest and westward. The team states that “renting is not a wise long-term financial choice”; if you’ll be in a place long enough to break even with the costs of ownership and if you can afford a mortgage, they suggest that you buy now.