As rents soar and the supply of rental housing remains constrained, 2015 could be the tipping point, pushing more renters to home ownership.
While younger Americans may prefer the flexibility of renting, home ownership is becoming more enticing, financially. Fannie Mae and Freddie Mac recently announced new low-down payment loans, mortgage rates are still very attractive, and renting is just plain more expensive than owning in many metropolitan markets.
In 2014, U.S. renters paid a collective $441 billion in rent, up $20.6 billion, or 4.9 percent, from 2013, according to a new report from Zillow, a real estate company. That translates to $26 more per month for the average renter. In some markets, however, the increase was far more. San Franciscans paid over 14 percent more in rent, while renters in Denver shelled out nearly 11 percent more. New York City area renters had it the worst, paying more than 10 percent of all the rent paid in the nation.
“As we prepare for New Year’s and the next home shopping season, we expect soaring rents to entice more people to the relative stability of home ownership, particularly younger potential buyers,” said Zillow’s Humphries.
One of the biggest barriers to home ownership today is that so many renters are paying so much to their landlords, they are unable to save for a down payment. That will only get worse in 2015. While developers in 2014 started the largest number of new rental units in 25 years, there is still a short supply of rental housing, both single and multifamily, and that means rents will continue to rise.
The original article can be found at www.nbcnews.com/business/real-estate/rents-soar-2015-may-be-year-buy-home-n276926.