Median-priced, single-family homes are outpacing rental rates and shrinking the affordability gap between homeowner and tenant, says CNBC. States across over three quarters of the nation are reporting less affordability for single-family homes, the highest total in 13 years and a 39% change from 2020.
Single-family rents also increased 10.9% year-over-year in October, the sixth consecutive high during a typically slow season for the housing and rental markets. Though homeownership offers more affordability with historically low mortgage rates, renting could become more cost-effective as rates steadily increase in 2022.
Owning the median-priced home is more affordable than the average rent on a three-bedroom home in 58% of the nation, according to ATTOM, which factored in all the expenses of owning, including the monthly mortgage payment, property taxes and homeowners insurance.
Much of this affordability is due to the historically low mortgage rates of the past few years. Rates are now beginning to rise, however, and are up more than half a percentage point from the year-earlier period, according to Mortgage News Daily.
“The trend is slowly shifting toward renters, which could be a major force in easing price increases in 2022,” said Todd Teta, chief product officer with ATTOM. “Prices can only go up by so much more before renting becomes financially easier.”