Weighing the cost of renting vs. buying
If you’re a renter, this news will come as no surprise: A new report says rents continue to rise faster than wages. The least-affordable markets are also predictable; Hawaii, the District of Columbia, New York and Northern California top the list. The price of buying a home is going up even faster.
In 2016, a three-bedroom rental will cost, on average, 3.5 percent more than this year, according to RealtyTrac. Meanwhile, weekly wages are up only 2.6 percent.
High demand is pushing up rents, said Daren Blomquist of RealtyTrac. Millions of people lost their homes during the housing crisis and continue to rent, he said, and lots of millennials have put off buying.
“That’s around another 5 million people who may have been homeowners who are renters, and that’s just putting a lot of upward pressure on the rental market,” he said.
In more than half the counties RealtyTrac looked at, it’s still more affordable to buy a house than to rent. That may shift, as home prices rise even faster, Blomquist said. Median home prices are up 5 percent from a year ago, he said. At the same time, rents should moderate as developers build more apartments.
“We’re seeing more multifamily rental housing being built right now than at any time since the 1980s, so in that respect help is on the way,” said Chris Herbert, managing director of Harvard University’s Joint Center for Housing Studies.
RealtyTrac’s Blomquist predicted by this time next year, it may be more affordable to rent in half of markets.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
