With rents rising so quickly in the Charlotte metro area, landlords can expect increased profits this year. And, for those in the market for a new home, it is still less expensive to purchase a property than to rent a three-bedroom home, according to a report by RealtyTrac.
The Charlotte-Gaston-Concord region bucked the national trend of decreasing returns from buy-to-rent purchases of three-bedroom homes in the first five months of the year. Across all 285 counties analyzed, 169 had lower gross yields, with the average return dropping to 8.9 percent from 9.1 percent on properties bought through May of last year.
In the Charlotte area, potential returns grew to 7.6 percent from 7.1 percent in the same period.
The average sales price on a three-bedroom homes grew 2 percent to $189,468 this year from $186,537 through May of last year. Average rents on those units grew 3 percent in the same period to $1,200 per month from $1,168.
Gaston County, meanwhile, was named one of the best counties in which to buy for renting purposes, with average rents increasing 3 percent to $1,200 this year and sales prices going up 1 percent to $125,179. The potential gross annual yield rose to 11.5 percent from 11.3 percent a year ago. If you’re looking for a place to live in Gaston County, there are some HUD properties available here. https://showcaserealty.net/gaston-county/
Nationally, average rental rates rose 3 percent while average home prices grew 4 percent.
As for the consumer mulling whether to rent or buy a house, Charlotte-area renters will pay on average 25.8 percent of their median income per month for a three-bedroom unit. With an estimated monthly payment of $1,176, those purchasing a home will spend 25.3 percent of their median income. RealtyTrac estimated home costs by assuming a 10 percent down payment, mortgage payments, property tax and insurance. To learn more about how to control costs during a home renovation without going into debt, click here.
It’s interesting to note that the percentage of monthly median income needed to rent this year has risen 3.2 percentage points from 22.6 percent in 2012. Homeowner costs have risen 4.1 percentage points from 21.2 percent in the same period. Wages have remained fairly stagnant, leading consumers to prioritize their spending habits as a larger chunk of their salaries go towards living costs.
In the Charlotte region, for-sale existing-home inventory has been at a 3.9-month supply this year, pushing up prices as demand exceeds supply. An inventory of six months is considered to be healthy.
RealtyTrac says 188 of the 285 counties (66 percent) analyzed nationally reported house payments that were lower than rents on three-bedroom units. Across all the markets, the average median amount of income needed to lease was 29.96 percent, compared with 29 percent for buying. Those figures are close to the generally accepted guideline that mortgage payments and rents should not exceed 28 to 30 percent of gross monthly income.
Counties with the highest percentage of median income needed to rent are San Francisco, at 49 percent; and Miami-Dade, Florida; and Philadelphia, at 48 percent each. Counties that are the least expensive for renters are Delaware, Ohio; and Williamson, Tennessee, at 15 percent, and Hamilton, Indiana, at nearly 16 percent.