Rising Rents Add Pressure to Buy!
February 3, 2022
Many renters are making moves toward homeownership as quickly rising mortgage rates and rents have them feeling increased pressure.
Average monthly rents climbed more than 14% year over year in December 2021, reaching $1,877. Miami and Austin, Texas, have seen rents surge more than 30% over the past year.
Economists point to homeownership as a way to stave off inflation and build wealth, The Wall Street Journal reports. But higher rents are making it tougher to save for a down payment to buy a home.
Real estate pro Brooke Baenen in Green Bay, Wis., told The Wall Street Journal that one of her first-time home buyer clients—in her 40s and a lifelong renter—was motivated to start looking to buy a home as her rent skyrocketed. At first, her client’s rents rose by $50 a month and then by $200 a month. She’s had other clients in similar situations who are paying higher prices for small apartments with rents similar to big-city prices.
Some renters may find a mortgage payment, with still historically low interest rates that are under 4%, may cost them about the same as or less than their increased rent costs.
“If you’re spending $2,400 a month in rent, that could be equity in a home,” Audrey Chaney, a real estate professional at Realty ONE GroupComplete and Acre & Co. in Sacramento, Calif., told The Wall Street Journal. “If you do that for two years, it’s almost $50,000.”
Source: “How Rent Hikes Make Buying a House Even Harder,” The Wall Street Journal (Feb. 2, 2022) [Log-in required.]