Homebuying Drastically Pricier Than Renting

For Sale sign in front of house | Image by Andy Dean Photography

Homeownership is a key tenet of the American dream, but climbing mortgage rates and soaring housing prices have made renting a more realistic option.

The average mortgage payment in the U.S. is more than double the average monthly apartment rent, according to a recent analysis by CBRE Research, per The Wall Street Journal.

The analysis shows that the average mortgage payment is now 52% higher than the average apartment rent, marking the biggest price disparity in the U.S. since about 1996.

The difference is not much better between the average monthly cost of owning a home and the average cost of leasing a home. According to CBRE, the average monthly cost of a new home purchase was $3,320 in the third quarter of 2023, compared to about $2,180 for the average monthly cost of a new lease.

Meanwhile, the median national rent price dropped for the first time in six months, falling to $2,011 in September, according to a recent Rent.com report.

Between 1996 and mid-2003, the average cost to buy or rent had been more or less equal up until the global financial crisis, per the WSJ. However, following the 2007–2008 financial crisis, interest rates sank to rock-bottom levels and housing inventory surged, making it more than 10% cheaper on average to buy a home than to rent one.

This is not the case today, though. With a 30-year fixed mortgage hovering around 8% and housing prices higher than ever, there has technically never been a worse time to opt for a home purchase rather than a lease.

Soaring home prices and mortgage rates have many would-be homeowners priced out of the market, leading them to turn to other options like apartments or — as reported by The Dallas Express — moving back home with family.

“People my age were being fed this dream that you could go to college, get a job in corporate America, and buy a house. That dream is unattainable,” said Naomi Alvarado, a 27-year-old University of Texas at Arlington graduate who currently lives with her parents in El Paso, reported Bloomberg.

With homeownership becoming less of a reality for young adults nationwide, U.S. housing policy may be creating a generation of renters.

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