In Which I Call Bullshit On A HousingWire Story

"I'm not just a singer/actor/dancer/producer. 
I'm a statistical anomaly."

Did you see the headline from a couple of days ago? “It costs more to own a home than to rent one in every U.S. state.”

The story talks about how using US Census Bureau data, CNBC was able to compare the median cost of renting a home to the median cost of owning a home.

Remember what a median is? A median is “the value or quantity lying at the midpoint of a frequency distribution of observed values or quantities.” In other words, if you have 1,001 houses, exactly 500 will cost more and 500 will cost less than the median home.

And this is where the methodology is screwed up. RentCafe took the same data that CNBC used and figured out that in the US, there are 73% more apartments rented than houses. And the Terner Center at Berkley took that same data and determined that “Today, single-family detached homes make up more than 62 percent of the housing stock in the United States…”

So the median rental is way more likely to be an apartment, while the median home that’s owned is way more likely to be a house.

Here’s another way to think of it. Jennifer Lopez has a $28 million house. So she and all the other millionaires who own mansions skew the median cost of home ownership up. But unless there's a crap ton of rich folks out there renting apartments for like $2 million a month, it’s a pretty safe bet that median rental doesn’t skew as far north.

If all those numbers make your eyes glaze over, let me frame it one more way. The common sense way.

The CNBC story implies that in every single state, the majority of people who own homes that they rent out are doing worse than breaking even. They're losing money.

Sorry, that just doesn’t fly. Sure, some generous landlords will take a loss on a property, renting it out for less than it costs them to own it. But the majority? Nope. Not buying it.

As a realtor®, it’s important to stay informed. But it’s way more important to think.

You can reach me by phone at 310 854 2458 or at my very fancy new email address, BrianYourFavoriteRealtor (at) gmail (dot) com.