Would-Be Homebuyers Turning To Rental Market As Purchasing Power Declines
Homeownership is increasingly unaffordable for most Americans, pushing more would-be buyers into renting, according to a new report from the John Burns Real Estate Consulting firm.
According to the report, the monthly calculated cost to own a home is now $839 more per month than renting, which the report cites as “almost $200 higher than at any time since the turn of the century.”
The report relies on data from April 2021 to April 2022 that illustrates the rising income disparity between renting and homeownership across several markets. The gap is especially notable in Sun Belt cities such as Nashville, Tampa and Phoenix, where the price of homeownership has skyrocketed over the past two years.
“Those who are looking to buy a home are steering toward renting because they are being priced out,” report author Danielle Ngyuen told The New York Times.
While the price of homeownership in those markets has also dramatically outpaced that of much the country, rental rates across the Sun Belt and on a nationwide basis have grown significantly over the past two years.
A FreddieMac report on the affordable housing segment also noted that migration trends have led to changes in housing availability, as many are migrating outward from their current metros to non-urban areas, in pursuit of more affordable housing. The report noted that “the pandemic amplified existing urban de-concentration by threefold from large, expensive metro areas to smaller, more affordable destinations.”
Single-family homebuyers are also finding themselves increasingly priced out by institutional investors buying newly built homes in bulk, leaving buyers with few options.