Owning Continues to Become More Affordable Relative to Renting
Home prices and mortgage rates have fallen so far that the monthly cost of owning a home is more affordable than at any point in the past 15 years and is less expensive than renting.
The Wall Street Journal's third-quarter survey of housing-market conditions in 28 of the nation's largest metropolitan areas. It found that home values declined, rent levels have risen, and mortgage rates are the lowest in six decades.
Home ownership is looking more affordable because after several years of declines, apartment rents will rise by around 4% this year, says Mr. Nadji. He says rents are poised "to pick up even more momentum across the country next year."
A new development in Canonsburg, Pa. The inventory of homes on the market has fallen from levels seen a year ago, as prices and mortgage rates continued to decline.
Mortgage rates are a big reason why affordability continues to improve. In 1991, a $200,000 mortgage would give someone a $1,700 mortgage payment. Today, with current interest rates, the payment equals about $1,200 - $1,300/month, a 25% cost decrease for the same loan.
Inventories have fallen from their bloated levels of one year ago. All 28 cities in The Wall Street Journal's latest survey saw homes listed for sale fall from one year ago, when markets were reeling with a substantial overhang of properties amid a big drop in demand.
See full article featured in The Wall Street Journal, "Stronger Lure for Prospective Home Buyers"