According to a new study, it's currently more affordable to rent a three-bedroom apartment than to buy a median-priced three-bedroom house in most Colorado counties, including the vast majority of metro Denver.

The facts and figures come from ATTOM Data Solutions, whose latest report looks at 855 counties across the country. Renting is considered more accessible than buying in fourteen of the eighteen Colorado counties included in this roundup, with the situation reversed in just four cases.

"That disparity is unusual," concedes Todd Teta, the chief product officer for ADS, corresponding via email. "Around the country, it's pretty close to an even split" — renting topped buying in 53 percent of counties overall. "But not so in Colorado, where renting is the more viable option in most counties analyzed. Like most areas of the West and other relatively high-priced parts of the country, renting remains more affordable than owning in Colorado mainly because of how far typical home values have raced past what the average worker can afford during the long, eight-year housing boom. Rents have not climbed quite so much, keeping that option in the more-affordable category."

That doesn't mean rent is a bargain, though. "It's important to keep in mind that neither renting nor owning is a financial cakewalk for average wage earners in most parts of Colorado counties," Teta notes.

Teta describes the way ATTOM came to its conclusions like so: "Affordability is based on the percentage of the average wages that would be consumed by owning or renting in any given county. The lower the percent, the more affordable. Rental affordability is the percentage of the average wage in a county needed to pay the average rent in that county. The cost of owning is the percent of the average local wage required to pay the mortgage, property tax, homeowner insurance and mortgage insurance on the median-priced home, assuming a 3 percent down payment. So if the average wage earner puts down 3 percent for the median-priced home, this would be the percentage of his or her wage needed to afford the monthly expenses."

Using this metric, ATTOM's number crunchers say the only place in metro Denver where buying is more affordable than renting right now is in Adams County. It's the only traditionally urban county to achieve this distinction; the other counties where buying bests renting are Pueblo, Park and Mesa, anchored by Grand Junction.

"It is indeed common for owning to trump renting on the affordability scale in less-populated areas outside urban or suburban areas, where home prices are considerably lower," Teta confirms. "The four counties in Colorado where owning is more affordable all have median home prices in the bottom half of the price scale for Colorado, ranging from $189,900 in Pueblo County to $375,000 in Park County. Three are not urban or suburban counties.The exception is Adams, which has nearly half a million people near Denver. Prices are going up faster there, yet it still remains cheaper to rent."

In contrast, renting is considered preferable to buying in Fremont County (Cañon City), Colorado Springs in both Teller and El Paso counties, Garfield County (Glenwood Springs), Eagle County (Edwards), Weld County (Greeley), Broomfield County, Larimer County (Fort Collins), Boulder County, La Plata County (Durango), and all the other counties in the greater Mile High City aside from Adams: Jefferson, Arapahoe, Douglas and Denver.

The reasons come down to dollars and cents, Teta confirms. "In the last two years, rents are up 6 percent to 12 percent in most of the Colorado counties included in ATTOM reports. But home prices have shot up 10 percent to 25 percent in those areas. Among the eighteen Colorado counties in the report, eleven saw prices increased faster than rents in both 2018 and 2019. All that has produced a gap between renting and owning that's wide and getting wider across much of Colorado."

The pinch gets tighter where housing costs in general are rising more quickly than wages — and again, most of Colorado qualifies. "Among the counties in the report, only Pueblo County has home ownership costs that are close to what lenders recommend as a percentage of wages, while only that county and Broomfield County have rents that are within the comfort zone," Teta divulges. "Owning the median-priced home takes up 31 percent of average wages in Pueblo, while renting consumes 30 percent in Broomfield and 33 percent in Pueblo. Thirty percent is around what is generally considered affordable."

How long will this scenario remain in place? "Lacking a big jump in wages across the state, the latest data suggests that home prices have hit or will soon hit their peaks," Teta believes. "That's because, even with a very small down payment, they are so far out of reach for average wage earners who lack a considerable amount of savings or stock investments they can use to help meet monthly expenses."

Still, Teta thinks that places in the Denver area and Boulder where wages are rising faster than home prices "have a ways to go before the trend flips. In six of the seven central counties in and around Denver, plus Boulder, the percentage of average wages needed to own is 4 to 17 points higher than it is to rent."

Click to access the data from the 2020 national rental affordability report.