Homeownership is now $1,000+ per month more expensive than renting.
One year ago, John Burns Consulting published a piece highlighting demand shifting from owning to renting—and we’d like to give you an update. The National monthly premium to own versus rent has now hit $1,030 per month, compared to $884 per month at this time last year (see note)—increasing demand for rental homes while reducing demand for homeownership.
Note: historical values do not exactly match last year’s article, as we added a new data source that provides more real-time responsiveness to this metric.
Even higher mortgage rates and still elevated resale prices continue to challenge for-sale housing affordability—resulting in a higher-than-usual number of home renters staying in place and even more buyers moving to the sidelines as they can no longer afford to purchase a home.While this metric has decelerated from a $1,188 peak in October 2022, it remains much higher than usual.
The premium varies a lot by market and is much less in the Midwest and other markets where homeownership is more attainable.
Interestingly, the monthly homeownership premium is below the national average of $1,030 in 15 of the 20 most popular markets for single-family rental investment, primarily because homes in these markets can be purchased at prices where the rents achieve a good yield for the landlord. In the most expensive markets in the country, such as San Francisco and New York, where the homeownership premium is substantial, single-family rental landlords have not been able to grow their businesses.