(MENAFN) According to a recent analysis by the National Multifamily Housing Council (NMHC), the cost difference between owning a home and renting an apartment has reached its widest gap in more than 15 years. The analysis found that, on average, owning a home costs USD1,176 more per month than renting from a professionally managed apartment complex. This is the biggest buy-versus-rent gap since fall 2006, the industry group said in its report.
The gap is largely due to the fact that, between 2019 and 2022, rents grew an average 6.3 percent every year while median home sale prices grew 17.4 percent. Additionally, mortgage rates have climbed in recent history, nearly tripling from January 2021 to November 2022 before easing slightly. As a result, the average 30-year mortgage this week stands at 6.42 percent, more than double its prepandemic level.
Despite a nationwide 11 percent drop in the median sales price for homes during the second half of last year, this was not enough to offset the impact of climbing mortgage rates. Chris Bruen, NMHC's senior research director, noted that demand for homes skyrocketed in 2022 and builders couldn't keep up with the pace, driving prices for existing homes even higher.
The Federal Reserve's efforts to combat soaring inflation have also contributed to the rise in mortgage rates, further increasing borrowing costs for potential home buyers. In this current economic climate, the cost of owning a home has become increasingly out of reach for many consumers, pushing more people towards renting.
Despite the current trend, however, homeownership remains an important goal for many Americans. While the cost of owning a home may be high, it can also provide long-term financial benefits such as building equity and stability. As the housing market continues to evolve, it is important for consumers to carefully consider their options and make informed decisions about their housing choices.
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