Why Rent When You Can Buy?!

Dated: 05/03/2019

Views: 125

Renters Paying Substantially More While Owning Costs Less

Renters Paying Substantially More While Owning Costs Less | MyKCM

In a recent Insights BlogCoreLogic reported that rent prices have skyrocketed since 2005. Meanwhile, the typical mortgage payment has actually decreased.

“CoreLogic’s national rent index was up 36% in December 2018 compared with December 2005, while the typical mortgage payment was down 4% over that period.”

Renters Paying Substantially More While Owning Costs Less | MyKCM

Why the difference between the costs of renting versus owning?

It makes sense that rents have risen. However, how did mortgage payments decrease? CoreLogic explained:

“It’s mainly because mortgage rates back in December 2005 were significantly higher, averaging 6.3% for a fixed-rate 30-year loan, compared with 4.6% in December 2018.

The national median sale price in December 2005 – $190,000 – was lower than the $220,305 median in December 2018, but because of higher mortgage rates in 2005 the typical monthly mortgage payment was slightly higher back then – $941 – compared with $904 in December 2018.”

Additionally, a recent report by the National Association of Realtors (NAR) showed that purchasing a home requires less of your monthly paycheck.

According to the Economists’ Outlook Blog, NAR’s February 2019 Housing Affordability Index showed that the “percentage of income needed” to pay the typical mortgage has decreased the last three months.

  • November - 17.3%
  • December - 16.9%
  • January - 16.2%
  • February – 15.9%

Bottom Line

What does this all mean to the current housing market? We think First American said it best in a post last week:

“The mortgage rate-driven affordability surge has arrived just in time… Rising affordability has already benefited home buyers and, if the lower rate environment persists, we’re in for a great spring home-buying season.”

Latest Blog Posts

Forbearance Numbers Are Lower than Expected

Forbearance Numbers Are Lower than ExpectedOriginally, some housing industry analysts were concerned that the mortgage forbearance program (which allows families to delay payments to a later date)

Read More

A Real Estate Pro Is More Helpful Now than Ever [INFOGRAPHIC]

A Real Estate Pro Is More Helpful Now than Ever [INFOGRAPHIC]Some HighlightsA recent study shared by NAR notes that both buyers and sellers think an agent is more helpful than ever during

Read More

Thinking of Selling Your House? Now May be the Right Time

Thinking of Selling Your House? Now May be the Right TimeInventory is arguably the biggest challenge for buyers in today’s housing market. There are simply more buyers actively looking for

Read More

Does Your Home Have What Buyers Are Looking For?

Does Your Home Have What Buyers Are Looking For?There’s great opportunity for today’s homeowners to sell their houses and make a move, yet due to the impact of the ongoing health crisis,

Read More