The New York Times' mortgage maven Lisa Prevost reports on the paradoxical effect that today's ultra-high rents are having on the housing market: While rising rents make it a better deal to buy, they also make it more difficult to save up for a down payment.
Prevost cites a recent Trulia report that found the rent vs. buy gap at its widest in at least three years. Across the nation, buying is 23% cheaper than renting, though two high-end pockets of the country, San Jose and Honolulu, flip that equation on its head.
She also looks at a recent survey of 1,000 renters conducted by TD Bank, in which more than 50% said their rents were hiked up in the last couple of years, with the average monthly rate rising $288.
Fifty percent of those surveyed reported that they were likely to buy a home within the next two years, citing rising rents and a desire to build equity. But an equal share said they either hadn’t saved enough money or had too much debt to buy now.
“It’s really about wage increases,” said Ray Rodriguez, the regional mortgage sales manager in the New York area for TD Bank. “They can’t keep up with the increases in rents and home prices.”