Renters Paying Substantially More While Owning Costs Less

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Real Estate Agent with Keller Williams Greater Omaha 20041001
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.”

 

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Rainmaker
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Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
Marketing Agent for The Todaro Team

Good morning, The Trumm Team Omaha Homes for Sale, Real Estate rates are still very reasonable.... if buyers are capable of buying, they'd be wise to call the Trumm Team and buy a home or condo....

Apr 25, 2019 07:40 AM #1
Rainmaker
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Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

I showed a family properties last weekend for their son, who was contemplating paying $1800 for a one bedroom apt.  Found a nice townhome with a garage that would have cost them $1400, and he still decided to rent.  

May 02, 2019 03:29 PM #2
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Rainmaker
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The Trumm Team Omaha Homes for Sale, Real Estate

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