NBC news 41 today November 21st 2024 
Full breakdown below 👇
Have you read that renting is currently cheaper than buying a house? Specifically, that new rent payments are less than be mortgage payments? Let me break that down for you:
Before we debunk, let’s acknowledge what was said and what was true: The WSJ points out that affordability in the housing market is at its worst in generations. With historic high prices and rising interest rates, affordability can be a challenge. Second, the WSJ presents data that shows that the average new mortgage payment in the U.S. is 52% higher than the average lease payment.
While both of the above points are true, a conclusion the author seems to draw is that renting makes more sense than buying a home right now. This is where the problem lies, so let’s delve deeper into the key points and unveil the real story behind homeownership in today’s market.
Comparing Apples to Oranges: The Wall Street Journal’s article compares average rent to average new mortgage payments, which is inaccurate. It fails to consider the vast difference between the two types of properties. For example, the average rental in the U.S. is a mere 897 square feet, while the average home boasts a spacious 2,014 square feet. This alone makes the comparison highly unfair, as this huge difference in size translates to more bedrooms, bathrooms, living space, storage, etc. To truly assess affordability, one must compare similarly sized rentals and homes in the same area.
Local Insights Matter: Taking a look here in Plymouth, MI, reveals a more balanced perspective. Using the same parameters as the Wall Street Journal (10% down, 30-year conventional loan), the average mortgage payment for a 1,000-1,300 square foot home in Plymouth comes to about $2,057. Meanwhile, similar-sized rentals in the same area range from $2,000 to $3,500. The square footage for these homes doesn’t even account for potential basements, which can double the total size to 2,000-2,600 SqFt.
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