If High Mortgage Interest Rates Having You Looking At Renting Instead Of Buying, Unfortunately You Will Also Find High Rental Rates!?!

Some (many?) would be home buyers are discovering that mortgage interest rates are making their potential monthly housing costs much higher than anticipated.

Just a year ago, the mortgage interest rate was 2.8% for a 30 year fixed rate mortgage and now it's 5.3%.

Combine higher mortgage interest rates with higher home values and today's buyers find much higher mortgage payments...

$225,000 = 2021 Median Sales Price of Townhomes, Duplexes and Condos

$1,038 = monthly payment assuming 10% downpayment, 2.8% mortgage interest rate

$241,767 = 2022 Median Sales Price of Townhomes, Duplexes and Condos

$1,431 = monthly payment assuming 10% downpayment, 5.3% mortgage interest rate

So, the potential monthly housing cost of buying a median priced townhouse has increased from $1,038 to $1,431 in the past year.

This might cause some (many?) would be buyers to explore renting instead.

But... rental rates have also increased significantly over the past year!

I don't have a large data set to support this statement, but generally speaking, townhouses that might have rented for around $1,100 a year ago are now often renting for $1,350 or more.

So, perhaps rental rates aren't increasing as quickly as monthly housing costs if you purchase a townhouse... but these higher rental rates mean that choosing to rent instead buy doesn't provide quite as much relief of your housing costs as you might imagine.