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Renting is Likely to Remain Cheaper Than Buying a Home
Mortgage payments are projected to exceed rental costs for at least the next five years, CBRE said Thursday. The average monthly mortgage payment for a newly purchased home now surpasses apartment rents by 38%, according to CBRE research.
Although these costs historically have aligned closely, average mortgage payments, including taxes, have risen by 75% since late 2019, creating a persistent gap between mortgage payments and rental costs, said CBRE.
CBRE expects modest 2.8% annual growth for multifamily rents nationwide over the next five years, in line with pre-pandemic trends. Meanwhile, elevated mortgage rates are expected to keep homeowners in their properties for longer periods, although all regions and markets across the country will eventually experience lower cost-to-buy premiums as interest rates drop and home price growth slows.
“The disparity between mortgage payments and rental costs presents a substantial hurdle for aspiring homeowners,” said Matt Vance, Americas head of multifamily research for CBRE. “The sharp increase in the cost of buying a home has made it increasingly difficult for individuals and families to make the transition from renting to owning.”
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