The premium for buying a home is now 17 percent higher than it was a year ago thanks to high interest rates and stubborn home prices, according to John Burns Real Estate Consulting. It might push the rent even higher.
In these times, double down — on your skills, on your knowledge, on you. Join us Aug. 8-10 at Inman Connect Las Vegas to lean into the shift and learn from the best. Get your ticket now for the best price.
In a continued trend that started at the onset of the COVID-housing market, it now costs $1,030 more each month to buy a typical home than to rent one.
That’s up 17 percent from a year ago, according to new research shared by John Burns Real Estate Consulting.
The increase is due to mortgage rates that have continued to inch higher throughout the past year, low supply and a drop in demand that has kept prices elevated after a historic jump in prices.
“Even higher mortgage rates and still elevated resale prices continue to challenge for-sale housing affordability — resulting in a higher-than-usual number of home renters staying in place and even more buyers moving to the sidelines as they can no longer afford to purchase a home,” John Burns’ researcher Danielle Nguyen said in the report.
In 2021, it was more expensive to rent than to own in 60 percent of the U.S., according to property data firm Attom. That dynamic quickly shifted in 2022, and it now costs more each month to buy than to rent in 95 percent of the counties Attom tracks.
That monthly premium varies by market, with the Midwest and Sun Belt having the smallest gap between renting and owning.
The monthly premium to buy versus rent is down from a peak in October, but it remains much higher than typical, John Burns said.
While the metric doesn’t account for possible short- and long-term gains in equity through home ownership, it does shed light on a stark divide between the cost of buying a home today.
High rates are contributing to the high cost of ownership. Typical…