The national housing market is definitely heating up, but it still makes more sense to buy instead of rent in more than half of all housing markets. According to ATTOM Data Solutions, buying a median-priced home is more affordable than renting a three-bedroom property in 54 percent of all U.S. counties as of the beginning of 2018. However, the straightforward rent-versus-buy equation is not really as straightforward as it might seem at first.

The Truth Behind Rent vs. Buy

One of the biggest factors in the decision to rent or buy is, naturally, how much of a household’s income will go toward paying for housing. Conventional wisdom states that no more than roughly 30 percent of the total budget should be allocated to housing, but in many markets a number of households pay this much or even more regardless of whether they rent or own. In San Francisco, for example, renters spend about 37 percent of their income on housing (certainly high), but homeowners might spend nearly 80 percent on the monthly mortgage, according to the Urban Institute. The difference in the amount of income spent on housing when renting vs. owning is called the “rent gap.”

Of course, median home prices, median rents, and median monthly income are all much higher in San Francisco than in most other areas of the country. This can skew an investor’s perspective when reading these types of reports. Median rent in San Francisco, for example, is $3,450 a month. “Even though it is cheaper to rent does not mean that it is still affordable for many people,” said Housing Finance Policy Center research assistant Sarah Strochak of the issue.

Buyers are Still Likely to Make a Move in 2018

While the fine print indicates, on a market-by-market level, that the benefits of renting and owning extend beyond the simple costs on the household budget, it is likely that buyers already sold on the idea of owning will probably still try to make a purchase in 2018. Javier Vivas, director of economic research for, pointed out recently that housing trends mostly indicate that property is going to get more expensive – and harder to access – in the coming months.

“The big story [with interest rates rising] is that those increases will further constrict affordability,” Vivas, said. “The more buyers wait, the more expensive it will get to buy – not just because of home prices, but because of inflationary pressure.” The economist went on to forecast national home price increases of just over three percent in the coming year, which could loosen up tight housing inventories in 2019. However, many homebuyers will probably opt not to wait simply because their fears about the market will mirror Vivas’ prediction: The longer they wait, the more they will pay for less and less house.

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  • Carole VanSickle Ellis

    Carole VanSickle Ellis serves as the news editor and COO of Self-Directed Investor (SDI) Society, a membership organization dedicated to the needs of self-directed investors interested in alternative investment vehicles, including real estate. Learn more at or reach Carole directly by emailing

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