Buying vs. Renting: U.S. Real Estate in 2019
Owning one’s home is accepted as the achievement of the quintessential American dream, regardless of whether that home is a bungalow or a mansion. The track toward homeownership has many bumps and hurdles, however, and not everyone makes it to the finish line. In 2019 fewer and fewer Americans will realize the dream and will resign themselves to spending hard-earned cash on rent payments for properties they do not own.
Why is this happening? Simply because home prices continue to rise while paychecks do not. In some locations, homes are selling for 6.7% more every year. A house valued at $200,000 last year will sell for $213,400 this year and $227,700 next year.
Mortgage rates are also rising. If you look at Zillow data, you see predictions of a 5.8% interest rate for 30-year mortgages by the end of 2019. Higher interest rates boost monthly mortgage payments.
The result is home prices and monthly mortgage payments that are out of reach for the average American. A report published by ATTOM Data Solutions on the affordability of home ownership in the U.S. stated that this country is experiencing the least affordable home-price levels since 2008.
In the meantime, rental prices are not increasing at the same rate as home prices. Apartments, townhouses, and similar-type rentals are the more affordable dwelling options. The ATTOM report mentioned above found that in over half of the counties studied, a medium-sized house was more affordable to rent than to purchase.