Home Finance The cost of owning a house exceeds the cost of renting one

The cost of owning a house exceeds the cost of renting one

by YAR

Housing costs, driven higher by rising home prices and rising mortgage rates, outpaced rental costs in April, making owning a home more expensive on a monthly basis than renting one. , according to a new report.

The report, released this month by John Burns Real Estate Consulting, a California-based industry advisory firm, showed that having a mortgage costs $839 more per month than having a lease, a difference of almost $200 more than in any other time in the last two decades. . Just a year ago, the difference between owning and renting was practically flat, according to data from the firm.

The imbalance has pushed many potential homebuyers out of the market, said Danielle Nguyen, a senior research manager at the firm that wrote the report. “Those looking to buy a home are leaning toward renting because prices are out of price,” she said.

Nationwide, the cost of owning is 31 percent higher than renting, but the disparity is greatest in metropolitan areas where home prices have skyrocketed, according to the report. In the Raleigh-Durham area of ​​North Carolina, for example, the cost of ownership was 42 percent higher than rent in April. The gap was 40 percent in Nashville, 38 percent in Denver and 35 percent in Tampa, Florida and Phoenix.

The report was based on data from April 2021 to April 2022. To calculate the cost of renting a home, the researchers looked at single-family home listings and added the cost of renters insurance. To determine the cost of owning a home, they set a default purchase price of 80 percent of the median home price in an area (usually used as an indicator of a starting home, Ms. Nguyen said), with a 5 percent down payment. and a 30-year fixed-rate mortgage. The calculation included principal, interest, taxes and insurance, as well as mortgage insurance and maintenance costs.

As more frustrated buyers pull out of the market, the rent-or-buy dilemma could change again. “There is a cooling in the housing market and it is accelerating,” Ms. Nguyen said.

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