Renting a home has never made more sense, recent data show
Don’t expect falling house prices to make homeownership more affordable than renting anytime soon.
Mark Twain once said, “Buy land. They’re not making it anymore.”
Many people who are deciding whether to buy or rent a house are tempted to agree. Few probably know of Twain’s lifetime of business failures, which eventually bankrupted him.
Those who follow his advice about land might find themselves in similarly dire straits.
That’s in part because the gap between the cost of buying and renting a house today is wider than at any time in recent history. And it’s also because the air is leaking out of the US housing bubble with record prices and mortgage rates at 20-year peaks.
That means buyers run the risk of making punishingly high monthly mortgage payments only to potentially suffer a capital loss when they decide to sell.
If they hope to wait out a housing market downturn, such as the one currently playing out, the Case-Shiller National Home Price Index has some bad news for them. It shows that it can take as long as six years for prices to recover after a downturn.
So, does renting really trump buying in today’s market? Let’s look at the data.