Renters Paying Substantially More Than Homeowners

Dated: 05/26/2019

Views: 20

Renters Paying Substantially More While Owning Costs Less | MyKCM

In a recent Insights BlogCoreLogic reported that rent prices have skyrocketed since 2005. Meanwhile, the typical mortgage payment has actually decreased.

“CoreLogic’s national rent index was up 36% in December 2018 compared with December 2005, while the typical mortgage payment was down 4% over that period.”

Renters Paying Substantially More While Owning Costs Less | MyKCM

Why the difference between the costs of renting versus owning?

It makes sense that rents have risen. However, how did mortgage payments decrease? CoreLogic explained:

“It’s mainly because mortgage rates back in December 2005 were significantly higher, averaging 6.3% for a fixed-rate 30-year loan, compared with 4.6% in December 2018.

The national median sale price in December 2005 – $190,000 – was lower than the $220,305 median in December 2018, but because of higher mortgage rates in 2005 the typical monthly mortgage payment was slightly higher back then – $941 – compared with $904 in December 2018.”

Additionally, a recent report by the National Association of Realtors (NAR) showed that purchasing a home requires less of your monthly paycheck.

According to the Economists’ Outlook Blog, NAR’s February 2019 Housing Affordability Index showed that the “percentage of income needed” to pay the typical mortgage has decreased the last three months.

  • November - 17.3%
  • December - 16.9%
  • January - 16.2%
  • February – 15.9%

Bottom Line

What does this all mean to the current housing market? We think First American said it best in a post last week:

“The mortgage rate-driven affordability surge has arrived just in time… Rising affordability has already benefited home buyers and, if the lower rate environment persists, we’re in for a great spring home-buying season.”

Blog author image

Heather Witte

Hi, I'm Heather Witte, Owner of the the Witte Group at eXp Realty in Austin, TX. Heather manages a dynamic team of individuals dedicated to raising the bar in residential real estate by consistentl....

Latest Blog Posts

Renters Paying Substantially More Than Homeowners

In a recent Insights Blog, CoreLogic reported that rent prices have skyrocketed since 2005. Meanwhile, the typical mortgage payment has actually decreased.“CoreLogic’s

Read More

Is There an Enormous Divide Between the Headlines and the Truth?

“I have observed that not the man who hopes when others despair, but the man who despairs when others hope, is admired by a large class of persons as a sage.” - John Stuart Mill

Read More

[INFOGRAPHIC] The Impact Staging Your Home Has On Your Sale Price

Some Highlights:The National Association of Realtors surveyed their members & released the findings of their Profile of Home Staging.62% of seller’s agents say that staging

Read More

What Are the Top Days to List Your Home for Sale? [INFOGRAPHIC]

Some Highlights:ATTOM Data Solutions conducted an analysis of more than 29 million single family home and condo sales over the past eight years to determine the top days to list your

Read More