Home News Renting vs. owning: The difference is ‘higher than at any time since the turn of the century’

Renting vs. owning: The difference is ‘higher than at any time since the turn of the century’

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The housing market DecelerateHowever, owning a home is still a costly proposal. The two graphs show exactly how expensive it is.

Just over a year ago, the monthly costs of ownership and rent were virtually the same. Blog post from John Burns RealEstate Consulting.. “Currently, owning a home costs $ 839 more a month than renting it. This difference is almost $ 200 higher than at any point since the turn of the century,” said John Barnes, Senior Research Manager. Is written by Daniel Nguyen.

For an entire residential property, renting a home will return approximately $ 1,962 a month. Data from Redfin, As of April 2022. But if homeowners drop a 7% down payment on their home, they’ll get stuck on a mortgage that returns $ 2,114 a month and an additional $ 152.

“Housing builders who were once hesitant to sell to rental home investors because demand is now shifting to rent are now seeking offers from investors,” Nguyen added. rice field. “Strong demand from investors provides additional support for today’s home prices.”

The historical gap between ownership and rent can be seen in the chart below:

But looking to the future, Nguyen told MarketWatch that “rising home prices and rising interest rates could affect homebuyers.” Currently, fewer people are eligible for housing, she said.Indeed, first-time buyers The price is being reduced more and more Of the country’s hottest real estate market.

According to John Barnes, this homebuyer’s penalty will be hit harder in some parts of the country. In places with the fastest house prices, such as Lowry Durham, Nashville, Denver, Tampa and Phoenix, owning a home was much more expensive than renting it.

John Burns Consulting envisioned buying a home at 80% of the current median. They also assume that the buyer will pay a 5% down payment on a 30-year fixed rate mortgage.

Putting that in context, a year ago, the National Association of Real Estate Agents said they could get it back by borrowing $ 1,705 a month compared to paying a $ 1,451 mortgage a month. January blog post.

Lower house prices have increased the cost of owning a home Soaring Since the beginning of the COVID-19 pandemic, I have been helped by the ability to work remotely as people move from crowded cities. Soaring construction costs and shortages of inventories also helped push prices up.

As of May 31, the typical value of a home was about $ 350,000. According to Zillow
Z,
-6.42%
..
In January 2020, just before the pandemic began to spread nationwide, the value of a typical home was $ 251,000.

According to the Atlanta Federal Reserve Board, the median home in March 2022 accounted for about 38.6% of those earning a median annual income of $ 68,000, up from 30.2% in March 2021. ..

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It was Cling to the positive realm On Tuesday after suffering a big loss on Monday.

Did you think about the housing market? Contact MarketWatch Reporter Aarthi Swaminathan ([email protected])...

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