The buy-to-rent premium hasn’t been this big since 2006, at the peak of the housing bubble.
With mortgage rates high and home prices still elevated, the monthly payment for a newly purchased home — assuming a 10% down payment and a 30-year fixed rate mortgage — was $1,176 more than renting an apartment at the end 2022, according to an analysis from the National Multifamily Housing Council, a trade group that represents owners of professionally managed rental buildings.
The cost of homeownership has surged 71% over the past three years, or an average of about 20% per year, compared to average annual rent growth of 6.3% over the same period. As a result, the premium owners pay over renters is now wider than it’s been since third quarter of 2006, the report said.
US housing costs surged in the pandemic. Buyers struggled to find affordable properties in a frothy housing market marked by bidding wars and cash offers and renters faced higher costs across the US. Now, things have cooled down a bit.
Still, there’s limited inventory available and mortgage rates remain high despite slipping slightly in recent weeks.
This article was provided by Bloomberg News.