Rent or Buy? A look into Huntsville’s housing market

Is it still cheaper to buy a house than it is to rent in Huntsville? A recent study from California based ATTOM Data Solutions found that while Madison County is included in the 58% of counties where it’s more affordable to buy a home, the gap between owning and renting is smaller than ever and still decreasing. 

In their 2022 Rental Affordability Report, ATTOM incorporated fair market rent data from the Department of Housing and Urban Development, wage data from the Bureau of Labor Statistics and public-record sales-deed data to analyze the cost comparison in 1,154 counties across the United States. 

With housing prices growing at a faster rate than rent prices in almost 90% of counties analyzed, the difference between average monthly rent and average monthly mortgage payments is only $30, the lowest ever recorded. To give an idea as to how quickly the gap has narrowed, the price difference was $322 in March 2020. 

In order to determine the affordability of both options, it’s important to compare the cost of each as a percentage of the average monthly wages for each county. ATTOM determined “rental affordability” by analyzing the average fair market rent for a three-bedroom property as a percentage of the average monthly wage. 

Similarly, home-buying affordability is the monthly house payment for a median-priced home (based on a 3 percent down payment and including mortgage, property tax, homeowner’s insurance and private mortgage insurance) as a percentage of the average monthly wage.

How does Madison County compare to the national averages? For starters, both rent and mortgage prices have increased at a faster pace than the national median rate. The average rent for a three bedroom apartment in the county increased from $1,172 in 2021 to $1,302 in 2022, an 11.1% jump. However, that is less than half the rate that Madison County home prices have been rising. 

Calculated from the 6,000 publicly available home sales from January – November 2021, the average housing price jumped to $250,000, which is 25% higher than the same time period in 2020. 

When comparing these costs to the 2021 average weekly wages, $1288, the monthly costs associated with home ownership made up a slightly less percentage of the average monthly income than the average price of rent. Home affordability was calculated at 21% compared to  23.3% for rental affordability. 

The 2% gap between the two is similar in other Alabama metros like Birmingham where rental affordability was calculated to be 26% and 21% for home affordability. The similarities end there though. Compared to the 11% increase in rent payments and 25% increase in housing costs in Madison County, Jefferson County actually saw rent payments actually drop by 6% while housing costs only rose by 4%. 

Madison County was also an outlier when it comes to rent price changes compared to the change in average wages. It was one of the few counties where the average cost of rent is increasing faster than the growth rate for the average wages. 

For more information, check out ATTOM’s full report here.