Rents Are High But It’s Still Not The Time To Buy, Here’s Why
The housing market is a scary one at present, rents have reached unfathomable record highs and buying is not a good option either.
If you live in America, you’ve likely experienced the frustration of rising food and gas prices. For many, the unfathomable increases are almost too much to bear. But another living component has had a rise in cost over the past year, putting immense pressure on the average citizen. Rent is at record-high levels this summer, with no signs of stabilizing.
June 2022 reached new heights for the national rent average. A few months ago, the national average was $1,876 a month, which has increased 14% since last year’s figure. Unfortunately, June marked the 16th month in a row when the rent average hit a record-high number. Though the past few months have led to less substantial rent growth, the standard is still at a deplorably expensive rate. American rent’s costly nature has led many to believe that purchasing a home will alleviate this financial burden. But, homeownership has also risen in cost, which puts renters in a problematic situation.
Though rent is supremely expensive, it’s less costly than the standard home-purchasing costs. June’s average rent is $561 a month less than the current starter homeownership expenses. The median American rent being 30% lower than typical homeownership costs doesn’t give financially-crunched renters any other affordable options. Mortgage rates have also bounced back to considerable highs since the pandemic’s beginning. At the start of 2020, mortgage rates were incredibly low, allowing many to purchase a home viably. But since housing demand started to increase in 2021, so did the mortgages. Some people blame banks keeping mortgages low in 2020 for their sudden rise in cost after 2021’s steep housing demand.
Mortgage rates have gone up alongside the rising rent costs. Average mortgage rates have increased immensely over the past six months, hitting a 5.51% standard, which is two percentage points higher than in January. Though the general amount of homes increased in 2022, the general deterrent for people purchasing housing has been the unaffordable mortgage rates. According to an analysis from Realtor.com, skyrocketing mortgage rates were the most substantial factor in the dropping number of first-time home buyers. Mortgage rates have added $416 a month to starter home costs as opposed to 2021. This has made housing primarily unaffordable for the average buyer, leaving many stuck with exorbitant rent prices.
As rent rates soar, many want to find an out from these excessive living costs. But in America’s largest cities, renting is still more affordable than purchasing a home. 38 out of 50 of America’s most populous cities are more affordable when a person is paying rent compared to buying a house with the current mortgage rates. The cities better for renters were mainly in tech-oriented areas like the West Coast, while more accessible home-buying alternatives were available in the Midwest and the South.
While rent is rising everywhere in this country, those wanting to invest in a home aren’t finding much luck either. The compounding effects of gas, food, and transportation cost increases have impacted every industry, including housing. Both rent and mortgage rates soaring have made living costs unequivocally unaffordable.
