google-site-verification=xO4V1iJzxFqIsUm17Mw7uW1jEmlSRLwDz3xxXpR1LmE

Renters Are Paying More When Its Cheaper To Own

Dated: 04/25/2019

Views: 17

Renters Paying Substantially More While Owning Costs Less | MyKCM

In a recent Insights Blog, CoreLogic 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.”

Blog author image

Leo Albanes

I am a Licensed Florida Real Estate Broker, Realtor®, and Owner of Charlotte County Properties Inc for over 16 years. In that time, I have received many review, awards and testimonials demonstrating....

Latest Blog Posts

Why Are Older Generations Not Selling Their Homes

Many studies suggest one of the main reasons for the inventory shortage in today’s market of homes for sale is that older generations have chosen to “age in place” over moving.The

Read More

Top Days To List Your Home For Sale INFOGRAPHIC

Top Days to List Your Home for Sale [INFOGRAPHIC] Some Highlights: ATTOM Data Solutions conducted an analysis of more than 29 million single family home and condo

Read More

What Is Really Happening With Home Prices

Home values have softened over the last twelve months. We are no longer seeing 6-7% annual appreciation levels for the national housing market. The current numbers are closer to 4%. Some have

Read More

The Cost Of Renting Vs Buying This Spring INFOGRAPHIC

Some Highlights: Historically, the choice between renting or buying a home has been a tough decision. Looking at the percentage of income needed to rent a median-priced home today .

Read More