Why Are You Still Renting?

Renters Paying Substantially More While Owning Costs Less

Renters Paying Substantially More While Owning Costs Less | MyKCM

In a recent Insights BlogCoreLogic 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? CoreLogicexplained:

“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.”

Should you have any questions regarding renting vs. owning, please give me a call at my Office Direct number: 908-698-0153; Paul Giannantonio, ERA Statewide Realty

Keeping Current Matters, Inc. © 2018 | 7204 Glen Forest Drive Suite 204 Richmond, VA 23226 | 631-787-6200 | support@keepingcurrentmatters.com | All Rights Reserved | Privacy Policy

Share This Post
User Avatar
Written by Paul Giannantonio
Paul Giannantonio began his real estate career in January 1987. A year after achieving Top Overall Producing Agent Honors in Somerset County in 1990, Paul Giannantonio founded ERA AMERICAN DREAM, REALTORS. Following the same principles that made him successful as an agent, he grew his agency from 3 people to over 15 trained real estate professionals, all with the same belief that "sound business sense leads to quality real estate service." Giannantonio has assisted consumers with over $300 million in real estate transactions. In November 2006 he joined forces with ERA Statewide Realty to better serve their clients needs. With a consultants approach to his business, his clients have noticed a qualitative difference in their representation. Whether you are buying or selling, you will notice the difference as well.
Have your say!
00

Customer Reviews

5
0%
4
0%
3
0%
2
0%
1
0%
0
0%

    Leave a Reply

    Thanks for submitting your comment!