To Buy or Rent, That is the Question!

Lance Evans

A recent Watertown Daily Times article cited a study by SmartAsset comparing average rent to home prices by county nationwide.
    In New York state, Jefferson County ranked 8th in terms of being more viable to buy than rent. According to the study, the break-even point, the point when the amount paid in rent exceeds the cost of purchasing a home, is 1.4 years. For the comparison, SmartAsset used an average price of $222,146 for a Jefferson County home with an average monthly mortgage of $558 versus an average monthly rent of $1,492.

    A little lower on the list was Lewis County at 22nd with a break-even point of two years. The average home price used was $178,887 with a monthly mortgage payment of $464 and $1,066 monthly rent.

    Coming in at 33rd in the state was St. Lawrence County. Using an average home price of $138,283, a monthly mortgage payment of $346 and monthly rent of $1,105, SmartAsset estimated that the break-even point was a little over two years.

    For the analysis, SmartAsset assumed a mortgage rate of 4.5 percent, closing costs of $2,000, and a 20 percent down payment when it created the above comparisons. A higher rate, a lower down payment, etc. would change these calculations.

    A similar study, done by ATTOM Data solutions came out in January 2017 and noted that in about two-thirds of the nation’s counties, it is more affordable to buy a home than rent. ATTOM compared rents of fair market three-bedroom properties to the monthly payments on median priced homes in 540 counties. The calculations included the cost of mortgages, property taxes, and insurance. The report also noted that in about a quarter of the markets surveyed, rents are surging faster than home prices.  In fact it noted that, on average, rents for a three-bedroom property rose 4.2 percent nationwide.   

    While ATTOM did not look at St. Lawrence or Lewis counties, Jefferson County was included.   Like SmartAsset, ATTOM found that it was more affordable to buy than rent in the county. They estimate that a buyer will spend about 26.8 percent of the average wage when buying a median priced home ($129,000) in Jefferson County while it takes 44.8 percent of wages to rent a three-bedroom dwelling at a median rent of $1,492. ATTOM’s study showed that in other areas of the state, for instance many of the Hudson River Valley markets, it is less expensive to rent.

    The analysis incorporated recently released fair market rent data for 2017 from the U.S. Department of Housing and Urban Development, wage data from the Bureau of Labor Statistics, and public record sales deed data from RealtyTrac in counties with at least 900 home sales in 2016.

    A third analysis by realtor.com showed that in all three counties, it is less expensive to buy than rent. In fact, Jefferson and St. Lawrence counties are numbers three and four in the state with Jefferson County buyers using twenty-two percent of income while renters used thirty percent. St. Lawrence County had a narrower gap of 6 percent with a buyer needing to spend 16 percent of income to buy and 20 percent to rent. Lewis County was also less expensive to buy with a 2 percent gap.

    Clearly, it is currently less expensive to buy than to rent in our area. So what should you do? Look at your circumstances including income and debt, consider the alternatives, and if you think you might be interested in buying a property, check with a mortgage professional and an area Realtor.

    Jennifer Stevenson, licensed real estate broker and owner of Blue Heron Realty in Ogdensburg, has been nominated as 2018 secretary-treasurer of the New York State Association of Realtors (NYSAR) a not-for-profit trade organization representing more than 53,000 of New York State’s real estate professionals.

    Ms. Stevenson, a member of the St. Lawrence County Board of Realtors since 1989, has served in many capacities at the local, state, and national levels of the Realtor Association. She is a past president of the St. Lawrence County Board of Realtors and served on the Association’s board of directors for over 25 years. In addition, she has chaired several NYSAR committees, and participates in the National Association of Realtors meetings. Locally she serves on the Ogdensburg City Council, is active in Rotary, and participates on St. Lawrence County’s Fair Housing Task Force among other activities. The elections will take place on September 27 at the NYSAR Board of Directors meeting.