Coming from CNBC, it looked to be worth reading: the promise of getting an unqualified, definitive answer to “Which is more affordable— owning or renting?” Getting a straight answer seemed worth knowing after last week’s word that 7 percent was the new annual inflation number. It’s old news that the cost of both owning and renting has been escalating—but the idea of actually losing the equivalent of a 7% chunk from the value of a family’s income makes serious budgeting seem a lot more urgent.
According to CNBC, owning a median-priced, single-family home has become measurably less affordable across nearly three-quarters of the nation—”the highest total in 13 years.” But the cost of renting single-family homes is also on the rise, as many current renters have found. According to CoreLogic, the national average rent rose more than 10% last year—climbing for the sixth year in a row.
Neither rise is unexpected given today’s inflation-wary environment. But that doesn’t answer the question about which is the more affordable. And, yes, CNBC did supply their answer, as well as a logical reason supporting it. Without further ado, here it is:
More affordable—> owning.
The reason—> low mortgage interest rates.
The likelihood that it will remain that way over the long haul— > not so clear.
To quote the Chief Product Officer at ATTOM Data Solutions, “The trend is shifting toward renters” due to a number of factors—the price of home purchases being foremost. That factor was not yet decisive, though. Last Friday’s announcement of the unexpectedly sharp 4.7% hike in wages, combined with still-low mortgage interest rates, has kept home buying in the affordability lead. Although at present “rising wages and interest rates…offset the price runups,” the future is not a lock. At week’s end, ‘s mortgage interest rates were on the move, drifting upward from Freddie Mac’s midweek average of 3.22%. For homeowners preparing to list in 2022, the latest market returns continue the streak of encouraging results.