Tenants in some parts of New York City will pay nearly 68% of their monthly income toward rent. The 2015 fair market rent is $1,904 a month. New York City's most expensive rental costs $500,000 a month.
RealtyTrac analyzed the cost of renting in 500 U.S. counties and found that renting is less affordable than buying in most U.S. markets. Based on how much of the average median income goes toward rent. Here are RealtyTrac's top 5 least affordable rental markets in the United States:
Location Percent of Median Income to Rent
1. Bronx, NY 67.57%
2. Baltimore City, MD 49.64%
3. Philadelphia, PA 47.40%
4. Brooklyn, NY 47.33%
5. Miami-Dade, FL 45.51%
More of the realities of renting vs. buying:
Purchasing a median-priced home was more affordable than renting a three-bedroom home in 68% of the 473 counties analyzed by RealtyTrac. On average, renters are expected to spend 27% of their median household income on payments to landlords next year. Meanwhile, becoming a homeowner will require an average of 25% of income to cover the mortgage.
Though there are some markets where both renting and owning are equally expensive, there are quite a few places where owning is cheaper than renting. Despite the rise in real estate prices over the past year, historically-low interest rates have helped maintain home affordability. Now there’s something else that could help people move from renting to buying a home.
To free up lending to more low-income and first time home buyers, Fannie Mae is now backing mortgages with down payments of as little as 3 percent; Freddie Mac will follow suit in March. Of course, borrowers will still need to meet strict criteria before they can take out a government-backed mortgage. Borrowers will need to have a credit score of at least 620, provide income and asset documentation, buy private mortgage insurance, and receive home ownership counseling.
Fannie Mae and Freddie Mac had already backed mortgages with as low as 5 percent for a down payment. The Federal Housing Administration insures loans with 3.5 percent down payments.
Getting ready to buy or sell a home? Contact HomeVisor today to get started with finding the best real estate agent for you.