ATTOM: Homeownership more affordable than renting in 63% of U.S. markets
Despite home price increases driven by bidding wars and tight inventory, low interest rates have turned the tables. Homeownership has become untraditionally more affordable than renting. Owning a median-priced three-bedroom home is more affordable than renting a three-bedroom property in 572 counties, or 63% of the 915 U.S. counties analyzed by ATTOM Data Solutions in its 2021 Rental Affordability Report.
Even though in 2020, median home prices increased more than average rents and wages in 83% of the U.S. housing markets, the report found, homeownership is more affordable in almost two-thirds of the country. That follows a year when the impact of declining interest rates helped counteract home prices, especially in suburban and rural areas.
Findings are based on average rental data for three-bedroom properties in 2021 from the U.S. Department of Housing and Urban Development, second quarter 2020 average wage data from the Bureau of Labor Statistics, and ATTOM’s January-November year-to-date 2020 home price data from public record sales deed data in 915 counties nationwide.
Median prices for three-bedroom homes are increasing more than average three-bedroom rents in 764 of the 915 counties that had at least 500 sales.
The most populous counties where home prices are rising faster are Los Angeles County, CA; Cook County (Chicago), IL; Harris County (Houston), TX.
The largest counties where rents are rising faster are New York City’s Kings County (Brooklyn), Queens County, New York County (Manhattan), Bronx County, and Allegheny County (Pittsburgh), PA.
“Home-prices are rising faster than rents and wages in a majority of the country. Yet, home ownership is still more affordable, as amazingly low mortgage rates that dropped below 3 percent are helping to keep the cost of rising home prices in check,” said Todd Teta, chief product officer with ATTOM Data Solutions. The trend shows the cost of renting has been relatively high, compared to the cost of ownership “and how declining interest rates are having a notable impact on the housing market and homeownership.”
The rest of the year is uncertain due to the Coronavirus pandemic and the broader economy, he added, “but right now, owning a home still appears to be a financially-sound choice for those who can afford it.”
Owning is more affordable in 47, or 50% of the 94 counties with a population of less than 1 million; and in 510, or 65% of the remaining 779 counties – with less than 500,000 people.
The report found that both the most affordable home ownership and rental markets are in the South and Midwest of the country, while the least affordable are in the West and Northeast.
RebuildNY to acquire Zombie homes, donate
RebuildNY.com, a local neighborhood revitalization nonprofit dedicated to eliminating risks posed by vacant, dilapidating properties to nearby communities, has launched the Vacant Important Properties (VIP) Initiative, effective Jan. 1, 2021.
Dubbed zombie properties, vacant or abandoned properties are not just an eyesore for the neighbors. They suppress price gains and property values costing surrounding homeowners equity losses.
RebuildNY.com is funding the new initiative to solve such problems by converting vacant homes “into valuable and vibrant homes throughout the lower New York region,” the company said, help distressed property owners, and in the process, bring to market new home sales options for buyers and investors.
Through VIP, owners of vacant homes can receive financial and other incentives to sell the property, in addition to the purchase price.
For properties in distress, such as foreclosures, short sales, reverse mortgages or estate sales, the initiative reportedly offers pro-bono services and assistance grants to make it easy for owners to close the sale, get paid and receive their VIP financial incentive payment.
VIP helps owners of vacant homes, local governments and municipalities, community leaders and concerned neighbors eliminate the risks posed by abandoned homes, according to the company website. It ensures following the purchase, these empty houses are renovated revitalizing communities and restoring property values.
In conjunction with the program, RebuildNY.com announced it has teamed up with nationwide food bank Long Island Cares to help feed families in need.
RebuildNY.com pledged to donate $1,800 for every vacant property purchased through the VIP program. The company will deliver the donated funds to Long Island Cares, which will supply 2,000 meals for Long Islanders in need.
The organization plans to distribute 100,000 meals during 2021.
Regional partnership launches $100M affordable housing preservation fund
National Equity Fund, Inc. (NEF), Metropolitan Atlanta Rapid Transit Authority (MARTA) and Morgan Stanley announced the launch of the $100 million Greater Atlanta Transit Oriented Affordable Housing Preservation Fund, an initiative designed to help protect low-income tenants from displacement and to keep neighborhoods affordable.
The fund reportedly will provide financing to multi-family property owners to help low-income families and individuals stay in their homes, and avoid their displacement as rents continue to increase in transit-rich neighborhoods of the Greater Atlanta metropolitan area.
The partnership between NEF and Morgan Stanley in the formation of this fund “will protect and preserve affordable housing within a mile radius of MARTA’s heavy rail stations,” said Jeffrey Parker, MARTA general manager and CEO. “The ground-up development of new affordable units takes time, and we wanted to do more in the short term to help.”
NEF will act as the new fund manager. Based in Chicago, NEF is a nonprofit affordable housing investor and lender, and one of the nation’s largest syndicators of federal Low Income Housing Tax Credits (LIHTC).
Morgan Stanley is the sole investor in the fund. Loans made by the fund to finance the acquisition and recapitalization of affordable housing projects for up to a 7-year holding period, the nonprofit explained in a statement.
The fund reportedly will provide acquisition capital for multi-family affordable housing developments near or beyond the end of their initial tax credit compliance period; Affordable housing properties that operate under the HUD Section 8, or other federal programs; Projects with no current rent restrictions will become restricted upon acquisition.
The fund also will provide high loan-to-value non-recourse, first mortgage debt “to finance the acquisition or repositioning of projects in targeted MARTA transit-oriented districts” throughout the Greater Atlanta region, the nonprofit said.
Potential investments include real estate acquisitions, paying off an existing first mortgage, restructuring existing financing gaps, general partner acquisition of limited partner interests, and investing in minor capital improvements.
“Affordable housing is critical to the well-being of families and communities,” said Matt Reilein, NEF president and CEO. “We’re proud to be part of this important effort to make sure Atlantans can afford to live near public transportation and connect to jobs they might otherwise not be able to access. This fund is about investing in the city’s future.”
Late in 2020, NEF closed on $25 million in Opportunity Zone investments in partnership with Fifth Third Bank that funded the development of nearly 300 rental homes for low- and moderate-income families, alongside commercial space and jobs “to expand economic opportunity.”
That fund offered a way Opportunity Zone capital can help meet the nation’s growing demand for affordable housing, the nonprofit said.