A new report, the 2022 Rental Affordability Report, was released in January. This report looks at average housing prices by county, and determines whether it’s cheaper to buy or rent for the average wage earner.

Attom Data Solutions, a property data company, wrote the report.

In 58% of the 1,154 counties studied nationwide, the report states that owning a median-priced dwelling is more affordable than the average rent on a three-bedroom property. In other words, major home ownership expenses consume a smaller portion of average local income than rent.

This trend has held even though median home prices have increased more than average rents, and also more than average wages in most of the counties studied.

Nationally, renting is generally more affordable in urban areas, while home ownership is generally more affordable in suburban and rural areas. There are, of course, exceptions.

The analysis used the following data:

• 2022 average fair-market rent data for three-bedroom properties (U.S. Department of Housing and Urban Development)
• 2021 wage data (Bureau of Labor Statistics)
• Public record sales-deed data for counties with at least 500 home sales from Jan. to Nov. 2021 (Attom Data Solutions)

Two values were calculated to gauge affordability:

• Rental affordability is the average fair market rent for a three-bedroom property as a percentage of the average monthly wage 
• Home-buying affordability is the average monthly house payment for a median-priced home (based on a 3% down payment and including mortgage, property tax, homeowner’s insurance, and private mortgage insurance) as a percentage of the average monthly wage

So, in counties where calculated rental affordability is lower than home-buying affordability, it’s cheaper to rent. And vice versa.

How does the Eastern Shore fare in this analysis? Only seven counties had 500 home sales in the period studied (Dorchester and Somerset did not). Of those, the analysis determined that it was cheaper-to-buy in Wicomico, Caroline, Cecil, and Kent counties and cheaper-to-rent in Worcester, Talbot, and Queen Anne’s.

Housing affordability, home buying vs. renting as percent of income. Source: Attom Data Solutions

In the cheaper-to-buy counties on the Shore, the average home sales prices are all below $300,000. Cecil County shows the highest home sales price and highest average rent in that group, probably affected by proximity to the I-95 corridor. Home-buying affordability ranges from 25% in Wicomico County (where an average home buyer earning the average wage will spend 25% of income on housing costs) to 38% in Kent.

In the cheaper-to-rent counties, the average home sales prices are considerably higher than in the cheaper-to-buy counties, no doubt influenced by waterfront and vacation properties, and additionally by commuting convenience in Queen Anne’s. Rental affordability ranges from 44% in Talbot County to 49% in Queen Anne’s (where the average renter earning the average wage will spend approximately half of income on housing costs).

Of course, because the affordability indices used in the report are calculated using averages — average rent, average home price, average wages — they only give us an idea of comparative affordability among counties. In real life, according to Habitat for Humanity, one in seven households in the U.S. pays half or more of its income on a place to live; the U.S. Department of Housing and Urban Development guideline (which many mortgage lenders use as a benchmark) is one-third of income. The pandemic has made things more difficult for many.

Barriers to homeownership are not addressed in the report. The major obstacles to buying a home are poor credit score or no credit, debt (including student loan debt), inability to afford a down payment, low income, and lack of affordable houses in the area. It’s also important to factor the cost of home maintenance and repairs into affordability calculations. Additionally, the process of home buying and getting a mortgage can be daunting for first-time home buyers.

According to a 2017 Zillow report, “Homeownership is simply out of reach for many Americans, including many families. In today’s hot housing market, more Americans are renting than at any time in recent history.”

“Today’s buyers have a median age of 40, are married or living with a partner (70%), earn a median income of $87,500 annually, and are overwhelmingly Caucasian/white (73%).” That’s hardly a representative description of population on the Eastern Shore.

Federal, state, and non-profit programs exist to assist low-income home buyers with expertise and grants. In Maryland:

• Maryland Department of Housing and Community Development — offers home buyer programs, including down payment and closing cost assistance
• Habitat for Humanity — using volunteer labor, builds and rehabilitates houses for families in need
• U.S. Department of Agriculture Rural Housing — offers home buyer programs in rural communities
• Other community-based home buyer assistance programs — check your county

Regardless of whether housing is rented or owned, it is crucial that it be affordable. That is the only way to build stable and strong communities.

Jan Plotczyk spent 25 years as a survey and education statistician with the federal government, at the Census Bureau and the National Center for Education Statistics. She retired to Rock Hall.