Realtor.com, a company operated by News Corp. subsidiary Move Inc., determines the monthly expense of home ownership by aggregating the median listing prices of studio, one-bedroom and two-bedroom residences in a given market, with weighting based on listing volumes. This calculation assumes an eight percent down payment on the home and a mortgage rate of 6.78 percent, including taxes, insurance and homeowner association fees. (Related: Mortgage rates surge to 20-year high, causing massive drop in home sales.)

Based on the method used, the rent-buy disparity is most pronounced in the Austin-Round Rock-Georgetown metro area in Texas, where the median rent registers at $1,530, substantially lower than the $3,695 monthly outlay for home ownership in February. In other words, buying a home in this metro is 142 percent more expensive than renting. Seattle-Tacoma-Bellevue and Phoenix-Mesa-Chandler metros follow suit, where rent is $2,422 and $1,528 more economical per month than purchasing a home, respectively.

Meanwhile, in the New York-Newark-Jersey City metro area, the median rent stands at $2,852, significantly undercutting the $4,995 monthly expenditure associated with buying a home.

In turn, the February monthly rent report from Realtor.com reveals that renting is far more convenient than buying a house.

“With rents continuing to fall and the cost of buying a home remaining high, renting a home is now a more cost-effective option in all major U.S. markets,” said Danielle Hale, chief economist at Realtor.com.

Zillow: Monthly mortgage payment for a typical American home have nearly doubled since January 2020

Renting in 90 percent of these metros was already more economical a year ago. However, as home prices and mortgage rates continue to increase, the percentage rises to 100 percent. This marks the first time such a scenario has occurred since Realtor.com began tracking in 2021.

A recent report from real estate giant Zillow supports the findings of Realtor.com.

According to the Zillow report, the monthly mortgage payment for a typical American home has nearly doubled since January 2020, skyrocketing by a staggering 96 percent in just four years. The report reveals that an average buyer now faces a monthly payment of nearly $2,200, assuming a 10 percent down payment on a house.

This figure far exceeds the previously accepted benchmark of 30 percent of median income, once considered the threshold for “affordable” housing in America. Moreover, the situation is made worse by the fact that 30-year fixed-rate mortgages have surged to around seven percent.

Orphe Divounguy, a senior economist at Zillow, stated that “home shoppers now need to earn $106,000 to afford the median home in the United States,” compared to the $59,000 salary required in 2020. To date, home buyers need 80 percent more income to purchase a home.

Visit HousingBomb.com for more stories on the real estate market. Watch this video reporting on the rise in mortgage delinquencies and business defaults.

This video is from the Mike Martins Channel on Brighteon.com.

More related stories:

• BAD NEWS for home buyers: U.S. house mortgage rates SKYROCKET to HIGHEST level in two decades.
• U.S. mortgage rate surges to highest level in over two decades.
• Interest rate for 30-year fixed mortgage rises to 8.45% – the highest it has been since 2000.
• The cost of a monthly mortgage payment for a typical U.S. home has NEARLY DOUBLED in just four years.
• California’s homeless construct two-mile-long vehicle encampment in San Francisco’s North Bay region.

Sources include:

• MarketWatch.com
• TheCenterSquare.com
• MSN.com
• Marketplace.org
• Brighteon.com

Median incomes have only risen by 23% over the same period, leaving many people unable to enter the housing market. In 2020, a household earning $59,000 per year could afford a typical home priced at $240,815. At that time, this income level was below the US median income of $66,000, meaning more than half of American households had sufficient funds to buy a home without overextending their budgets.

Today, those shopping for a home need to earn $106,000 annually to afford a median-priced home at $342,941. This is $47,000 more than they needed to earn in 2020 to afford a home and well above the current average income of $81,000.

A recent Zillow analysis has shown how difficult it has become to break into homeownership as the cost of purchasing a home has outpaced income growth, pushing hopeful buyers out of the market. In fact, only a handful of major metropolitan areas were found to be affordable at the median income. Zillow defines affordability as spending no more than 30% of your income after offering a 10% down payment.

Monthly mortgage payments have nearly doubled over the past four years, with today’s typical buyer facing a monthly payment that is 96% higher compared to 2020 levels. This equates to an average payment of $2,200 per month with a 10% down payment.

The main factors behind this increase are the significant rise in home values and mortgage rates. Mortgage rates have gone up from around 3.5% in early 2020 to between 6.5% and 7% so far this year. Limited housing supply has also contributed to the issue.

In 2023, buyers needed an income of $97,000 to afford a typical home, up from $86,000 in 2022. This was $22,000 above last year’s median household income of $75,000.

“The income needed to comfortably afford a typical home is now six figures,” said Orphe Divounguy, chief economist at Zillow. “It’s a big increase that’s due to a combination of higher prices, mortgage rates, and limited supply.”

Neither mortgage rates nor home prices are expected to ease anytime soon, with economists from Fannie Mae predicting rates to drop to 6% by the end of the year and Zillow forecasting home prices to increase by 0.9% over 2024 to an average of $349,611.

Younger buyers are also facing challenges, as the pressure of affordability has delayed their entry into homeownership. It now takes 8.5 years for a household making the median income to save enough for a 10% down payment, a year longer than it would have in 2020. The average age of first-time homebuyers has also risen from 31 to 36 in the past five years.

To overcome these hurdles, buyers are turning to strategies such as “house hacking” and seeking financial assistance from friends and family. In 2023, 21% of those who purchased reported getting financial help from friends or family, according to Zillow.

In conclusion, the affordability of homes has significantly decreased in recent years, with the income required to purchase a home outpacing wage growth. This has resulted in many prospective buyers being priced out of the market and forced to employ creative strategies to afford a home.

Article generated from corporate media reports.