You've probably heard many reports on how expensive it is to live in Austin, but a new report finds that Hays County is one of the country's least affordable rental markets for millennials.
Hays County follows the trend playing out in most major U.S. markets – it’s still more affordable to buy a home than it is to rent. That’s one of the findings of a report out today from ATTOM Data Solutions. Researchers looked at the rental affordability of metros where millennials make up at least 30 percent of the population. Researchers say they’re the key demographic likely to make the leap from renting to homeownership in the coming years. Daren Blomquist, the group’s senior vice president, said they considered the affordability of three-bedroom rental properties, in particular.
“We wanted to look at three-bedrooms because that’s going to be more likely to be an actual home,” Blomquist said. “As someone who maybe is getting married or is starting to have kids, this study is really looking at whether it’s more affordable to buy a home or to rent a home.”
Blomquist said it remains cheaper for millennials to buy a home instead of renting one in Hays County largely because slow wage growth there isn’t keeping pace with rising costs. Residents would have to spend about 56 percent of their wages to rent a three-bedroom property. Buying a median-priced home is cheaper, although, just barely. It would cost about 55 percent of your annual earnings on average. And, if interest rates continue to climb, Blomquist said buying could soon become the less affordable option.
“For buyers who are pretty sure they want to buy, that window of opportunity to buy is shrinking,” he said. “I mean, this window we’ve been seeing that had these super low interest rates that really made buying attractive is closing.”
Not that the window is closing forever, but researchers say if you’re looking to buy, now may be the right time.
“Six months from now, everything will be more expensive, and particularly for the millennial buyers, the buyers who have been saving their money to get their down payment, maybe looking to get out of the apartments,” said Jim Gaines, chief economist at the Texas A&M Real Estate Center. “If they’re thinking about getting into the home ownership market, there’s no longer a real good reason to wait.”
In Williamson and Travis Counties, the report finds that renting remains the cheaper option for millennials. But, Blomquist said, those savings are relative.
“For some of these folks, especially if you’re looking in Travis County for instance, it’s picking your poison,” he said. “I mean, rents are not necessarily highly affordable, and then on the other hand, home prices are now well over $300,000.”
Throughout much of Central Texas, the prices for both options have continued to rise rapidly each year.