A new report shows that housing costs, spurred by soaring home prices and rising mortgage rates, were more expensive than rental costs in April.
Demand Shifting from Owning to Renting
The single-family rental sector is definitely having “a moment” amid soaring home prices and fast-rising mortgage rates. More and more prospective buyers, many priced out of the housing market or forced to buy a smaller house in a less wanted location, are choosing to rent despite rent prices increasing +15.5% y/y, according to Realtor.com.
Just last year, the monthly cost of owning and renting was nearly identical. Now, according to a newly released report from John Burns Real Estate Consulting, homeownership costs in April were +$839 more per month than renting. This differential is nearly $200 more than at any time since 2000.
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The result? The rental sector’s current “moment” may last much longer than a moment.
Y/Y Growth Costs to Own vs Single-Family Rent
Metro Cost to Own Cost to Rent Difference
Raleigh-Durham 51% 9% 42%
Nashville 49% 9% 40%
Denver 42% 4% 38%
Tampa 49% 14% 35%
Phoenix 47% 13% 35%
Jacksonville 47% 13% 34%
Las Vegas 47% 13% 34%
Orlando 46% 13% 33%
Riverside 41% 8% 33%
Charlotte 45% 12% 32%
Atlanta 43% 11% 32%
US National 37% 6% 31%
Miami 41% 10% 30%
Austin 40% 10% 30%
Indianapolis 35% 6% 29%
San Antonio 38% 9% 29%
Dallas 39% 11% 29%
Cincinnati 30% 2% 28%
Columbus 34% 6% 28%
Houston 32% 7% 25%
Chicago 27% 4% 23%
Calculations of Costs
John Burns Real Estate Consulting calculated costs to own (including payment and maintenance) by assuming a home purchase at 80% of a currently median-priced existing home with a 5% down payment and a 30-year fixed-rate mortgage. Also included are PITI plus mortgage insurance and maintenance costs from 0.85% to 1.25% of home value.
JBREC calculated single-family rent cost by assuming a home valuation at 80% of the current median-priced existing home and researching asking rents collected. Also included is renter’s insurance based on state level data.
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Thanks to John Burns Real Estate Consulting and RealTrends.
