Soaring Home Prices and Rates Make Renting the Affordable Option in Most Major Cities
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Home prices and mortgage rates have soared, making buying a home unaffordable for many Americans. In most major cities, it is now cheaper to rent than buy.
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The median home price rose over 40% from early 2020 to mid-2022, to over $400,000. Prices are still increasing, while mortgage rates have doubled since early 2022.
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Rising interest rates have not slowed home price growth as expected. Low supply, high demand, and homeowners not wanting to give up low rates are keeping prices high.
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A 2023 analysis found renting cheaper than buying in 47 of the 50 largest metro areas. In some cities, monthly buying costs are over twice as high as renting.
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Economists say home prices are unlikely to fall significantly unless interest rates decline sharply. With limited housing supply, prices will remain high while many homeowners keep low rate mortgages.