Is Owning a Home More Affordable Than Renting One
If spending more time at home in the past year really makes you think about purchasing a new home instead of renting one, you’re not alone. You may wonder, however, whether the dollars and cents add up in your favor as housing prices continue to rise.
According to experts, in most cases, it’s still more affordable to buy a home than rent one. Here’s why.
Owning a three-bedroom house at an average price is cheaper than renting a three-bedroom property.
This has happened even though median house prices have gone up more than the average rent over the last year.
ATTOM Data Solutions recently released the 2021 Rental Affordability Report, which states:
Owning A Home VS Renting Affordability, How is this possible to
The answer: historically low mortgage interest rates. Todd Teta, Chief Product Officer with ATTOM Data Solutions, explains:
House prices are growing at a faster rate than rents and wages in most of the country. However, home ownership is even more affordable, as surprisingly low mortgage rates, which have fallen below 3%, help keep the cost of rising house prices down.
In 2020, mortgage rates reached all-time lows 16 times, and so far, they’re continuing to hover in low territory this year. These low rates are a big factor in driving affordability. Teta also notes:
It’s startling to see that kind of trend. But it shows how both the cost of renting has been relatively high compared to the cost of ownership and how declining interest rates are having a notable impact on the housing market and home ownership. The coming year is totally uncertain, amid so many questions connected to the Coronavirus pandemic and the broader economy. But right now, owning a home still appears to be a financially-sound choice for those who can afford it.
Owning A Home, Bottom Line
If you’re thinking about buying a house this year, join us today to discuss options that fit your budget when affordability is in your favor.