Newsfeed: Buy/Rent Premium Highest Since 2006 Housing Bubble Peak

By Tyler Durden via ZeroHedge

The math is truly daunting for would-be homebuyers: The difference between the mortgage payments and rents is the largest it’s been since the 2006 housing bubble that led to the Great Recession. 

Factoring in an assumed 10% down payment on newly purchased home, the National Multifamily Housing Council says a 30-year fixed-rate mortgage payment costs a whopping $1,176 more than renting an apartment, as of the end of 2022.

Rapid home price appreciation in recent years coupled with rising interest rates has caused the monthly cost of homeownership to rise far more than both the cost of rent and other consumer goods,” said the National Multifamily Housing Council, a trade group for the apartment industry.

The cost of owning a home has soared 71% in three years — an average of about 20% per year, compared to an average annual rent increase of 6.3%.

This week — in the wake of banking collapses that have pushed benchmark Treasury rates lower — mortgage rates fell for the second consecutive week, with the average 30-year fixed mortgage falling 18 basis points to 6.42%.

Higher rates have thrown cold water on home sales, to the extent they fell 12 consecutive months before February’s stunning 14.5% month-over-month surge in existing home sales.

“If mortgage rates continue to slide over the next few weeks, look for a continued rebound during the first weeks of the spring homebuying season,” said Freddie Mac chief economist Sam Khater.

February new-home sales rose 1.1%, to the best pace since August. Meanwhile, February’s median sales price of a new home was $438,200, according to a report from the Census Bureau and the Department of Housing and Urban Development. That’s up 2.5% from the previous February.

“Home shoppers are looking to find the optimal combination of prices and mortgage rates before entering the market,” Hannah Jones, economic analyst at Realtor.com, told Bloomberg. “However, elevated rates and high prices mean that point doesn’t yet exist in the market for many would-be buyers.”

While the cost of homeownership remains stubbornly high, rent inflation has been on a steady nine-month cooling trend, with the yearly growth rate easing to the lowest point since 2021.

 


More From The Real Estate Guys

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


Subscribe

Broadcasting since 1997 with over 600 episodes on iTunes!

real estate podcast on itunesSubscribe on Androidyoutube_subscribe_button__2014__by_just_browsiing-d7qkda4

 

 


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

Facebook
Twitter
LinkedIn
Email

Be the first to know when new content arrives!

Explore The Archives

Archives
Metal Ask Change
Gold $2157.97 $-7.05
Silver $25.08 $-0.14
Platinum $912.98 $-15.71
Palladium $1040.72 $-30.38
Gold to Silver 86.04 to 1
Gold to Platinum 2.36 to 1
Gold to Palladium 2.07 to 1

The Real Estate Guys™ Guests and Contributors Have Been Featured On:

Scroll to Top
Scroll to Top