Cheaper to Own, But Most People Still Rent

by Alonzo Turner

Owning a home is getting cheaper, but people are still choosing to rent.

Buying a home is affordable, despite it being the largest purchase of most people’s lives. Low mortgage rates are helping to make homeownership one of, if not the, cheapest option in terms of long-term residence. However, it remains commonplace for buyers, particularly Millennials, to opt into the rental market due, in large part, to expensive down payments; though, new mortgage rules should lower that commitment.

In August, Zillow released a series of market reports examining mortgage and rental affordability across the nation, as well as in select metro areas. What the reports found, in a nutshell, is that mortgages are getting cheaper.

From 1985 to 1999, the typical American devoted slightly more than 22 percent of his or her annual earnings to a mortgage. Fifteen years later and that figure has dropped significantly to 15.3 percent.

On the reverse side of that spectrum, rental rates have actually gone up 5 percent.

Low Mortgage Rates Drive Affordability

While the financial side of both homeownership and renting have developed differently in different parts of the country, Zillow’s reports did note some more widespread trends:

  • In June, of the country’s 100 largest metros, only six were paying a larger portion of their incomes today than historically in order to buy their area’s median priced home.
  • Low mortgages rates have been paramount to the widespread affordability keeping monthly costs down from homeowners.
  • If mortgage rates climb to five percent, which would still be relatively low by past standards, the number of unaffordable metro areas among the U.S.’s top 100 would more than double to 13. Add another percent and nearly one-quarter become unaffordable.

Rental Rates Still Rising

The housing crisis is so aptly named because of the chaos and turmoil that trailed in its wake – people lost their homes, their savings, everything. Yet, still, there was a silver lining buried amongst the muck, which was the rebuilding of the housing market, particularly in regards to mortgages.

Under the light of scrutiny, lenders have played it safe, tightening standards and ensuring that those who receive a loan are capable of paying it back. Coupled with the Fed’s decision to lower interest rates as a way of tempting buyers back into the market, mortgage rates have fallen to remarkable lows, and hopeful buyers are reaping the benefits. Renters have not been so fortunate.

In the eight years since the housing market first started its now historic plummet, rental rates have continued climbing with barely a hiccup. While pre-bubble rates demanded that renters devote approximately one-quarter of their annual income to housing, today’s renters pay about 29.5 percent. According to Zillow’s review, 88 of the nation’s 100 largest metro areas will pay more this year towards rent than they would have historically.

Stan Humphries, chief economist for Zillow, said low mortgages are encouraging potential buyers to start saving for a downpayment, but points out that persisting high rental rates are making it exceedingly difficult for renters to save.

“As rents keep rising, along with interest rates and home values, saving for a downpayment and attaining homeownership becomes that much more difficult for millions of current renters, particularly millennial renters already saddled with uncertain job prospects and enormous student debt,” Humphries said. “In order to combat this phenomenon, wages need to grow more quickly than they are, particularly for renters, and growth in home values will need to slow.”

Unfortunately, according to the U.S. Bureau of Labor Statistics, wage growth is actually projected to slow, as well as overall labor force participation, compared to the last decade, from a growth rate of 0.7 percent annually to 0.5 percent annually.

As rental rates continue to climb, expect more Millennials to transition into homeownership.

Read More Related to This Post


  • I simply want to mention I’m new to weblog and honestly savored your web-site. Very likely I’m going to bookmark your site . You actually come with superb stories. Thanks a bunch for sharing with us your web site.

  • DonaBretTere says:

    cheap generic levitra vardenafil [url=http://levitrashop.com]Buy Levitra[/url] levitra 20 mg?pricehair loss while taking clomid [url=http://usfastmed.com]Buy Clomid[/url] success clomidviagra prescription cost [url=http://newmedicforum.com]Priligy[/url] viagra and oxycodonegeneric cialis risks [url=http://cialisfor.com]Cialis Online[/url] cialis otc in canadabuy cialis super active plus online [url=http://fastshipcialis.com]Buy Cialis Online[/url] cost of cialis vs viagra

  • Of course, what a splendid website and illuminating posts, I definitely will bookmark your site.Have an awsome day!

  • You really make it seem so easy with your presentation but I find this topic to be actually something that I think I would never understand. It seems too complicated and extremely broad for me. I’m looking forward for your next post, I’ll try to get the hang of it!

  • Definitely believe that which you said. Your favourite reason appeared to be on the web the simplest factor to bear in mind of. I say to you, I definitely get irked even as people think about concerns that they just do not know about. You controlled to hit the nail upon the top and outlined out the whole thing with no need side-effects , folks can take a signal. Will probably be again to get more. Thanks|

  • I was suggested this web site by my cousin. I’m not sure whether this post is written by him as no one else know such detailed about my trouble. You are incredible! Thanks!

  • Smart Car says:

    certainly like your web site however you have to check the spelling on several of your posts. A number of them are rife with spelling issues and I find it very bothersome to inform the reality then again I¡¦ll certainly come again again.

  • Nicky Janow says:

    hey there and thank you for your information – I have definitely picked up anything new from right here. I did however expertise some technical points using this site, as I experienced to reload the site many times previous to I could get it to load properly. I had been wondering if your web hosting is OK? Not that I am complaining, but slow loading instances times will very frequently affect your placement in google and can damage your high quality score if ads and marketing with Adwords. Anyway I am adding this RSS to my e-mail and could look out for much more of your respective exciting content. Make sure you update this again soon..

  • Wow, marvelous blog layout! How long have you been blogging for? you made blogging look easy. The overall look of your site is excellent, as well as the content!

  • Awsome blog! I am loving it!! Will be back later to read some more. I am bookmarking your feeds also

  • I am really impressed with your writing skills and also with the layout on your blog. Is this a paid theme or did you customize it yourself? Either way keep up the excellent quality writing, it is rare to see a nice blog like this one these days..

  • Wow, superb blog layout! How long have you been blogging for? you made blogging look easy. The overall look of your website is great, as well as the content!

  • Ceramic Tile says:

    I am constantly looking online for tips that can help me. Thx!

  • Just desire to say your article is as surprising. The clarity in your post is just excellent and i could assume you’re an expert on this subject. Fine with your permission allow me to grab your RSS feed to keep updated with forthcoming post. Thanks a million and please keep up the enjoyable work.

  • Hello.This post was extremely fascinating, particularly because I was browsing for thoughts on this subject last Friday.

  • I was just searching for this information for a while. After 6 hours of continuous Googleing, at last I got it in your website. I wonder what is the lack of Google strategy that don’t rank this type of informative web sites in top of the list. Usually the top web sites are full of garbage.

  • I’m not sure where you’re getting your information, but great topic. I needs to spend some time learning much more or understanding more. Thanks for wonderful info I was looking for this information for my mission.

  • Hello There. I found your blog using msn. This is a very well written article. I’ll be sure to bookmark it and return to read more of your useful information. Thanks for the post. I will certainly comeback.

  • My spouse and i felt now joyful that John managed to round up his reports through the entire ideas he grabbed through your blog. It’s not at all simplistic to just be handing out key points which usually people could have been making money from. And we all figure out we need the website owner to give thanks to for this. The main illustrations you made, the simple web site navigation, the friendships you can make it easier to promote – it’s got most fabulous, and it’s really making our son and our family imagine that the issue is fun, and that is seriously pressing. Thanks for everything!

  • It is the best time to make some plans for the future and it’s time to be happy. I’ve read this post and if I could I want to suggest you few interesting things or tips. Maybe you could write next articles referring to this article. I wish to read more things about it!

  • Law School says:

    I think this is one of the most significant information for me. And i’m glad reading your article. But want to remark on few general things, The web site style is great, the articles is really excellent : D. Good job, cheers

  • Criminal Law says:

    I¡¦m no longer certain where you’re getting your information, however good topic. I must spend a while finding out more or understanding more. Thank you for magnificent info I used to be searching for this information for my mission.

  • I’ve been absent for some time, but now I remember why I used to love this site. Thanks , I¡¦ll try and check back more frequently. How frequently you update your site?

  • Thanks for sharing excellent informations. Your web-site is very cool. I am impressed by the details that you¡¦ve on this website. It reveals how nicely you understand this subject. Bookmarked this website page, will come back for extra articles. You, my friend, ROCK! I found simply the info I already searched everywhere and just couldn’t come across. What an ideal site.

  • Hi there, You’ve done a great job. I will definitely digg it and personally suggest to my friends. I’m sure they’ll be benefited from this web site.

  • We’re a group of volunteers and opening a new scheme in our community. Your website provided us with valuable information to work on. You have done a formidable job and our entire community will be grateful to you.

  • Hello. magnificent job. I did not anticipate this. This is a fantastic story. Thanks!

  • Hi my family member! I want to say that this article is awesome, nice written and come with approximately all significant infos. I would like to see extra posts like this .

  • Whats Happening i’m new to this, I stumbled upon this I’ve found It absolutely helpful and it has aided me out loads. I’m hoping to give a contribution & aid different customers like its aided me. Great job.

  • You completed several nice points there. I did a search on the subject and found a good number of folks will have the same opinion with your blog.

  • I was suggested this blog by my cousin. I am not sure whether this post is written by him as no one else know such detailed about my difficulty. You are incredible! Thanks!

  • Terrific work! This is the kind of information that should be shared around the net. Shame on Google for not positioning this publish upper! Come on over and consult with my site . Thank you =)

  • Flokati Rug says:

    naturally like your web-site however you have to take a look at the spelling on several of your posts. Many of them are rife with spelling problems and I to find it very troublesome to inform the reality however I¡¦ll definitely come back again.

  • It is perfect time to make some plans for the future and it’s time to be happy. I have read this post and if I could I want to suggest you few interesting things or advice. Maybe you could write next articles referring to this article. I wish to read even more things about it!

  • Thank you for the sensible critique. Me & my neighbor were just preparing to do a little research about this. We got a grab a book from our area library but I think I learned more from this post. I am very glad to see such excellent info being shared freely out there.

  • Hello.This post was extremely fascinating, especially because I was searching for thoughts on this topic last Wednesday.

  • Of course, what a splendid website and instructive posts, I definitely will bookmark your site.Best Regards!

  • Wow, incredible weblog structure! How lengthy have you ever been running a blog for? you make running a blog glance easy. The overall glance of your website is excellent, let alone the content material!

  • SEO Packages says:

    Hello.This post was really fascinating, particularly since I was looking for thoughts on this subject last Sunday.

  • SEO Packages says:

    Hi there, You’ve done an excellent job. I’ll definitely digg it and personally recommend to my friends. I’m sure they will be benefited from this website.

  • Thank you a bunch for sharing this with all of us you really recognise what you are speaking about! Bookmarked. Kindly also consult with my web site =). We can have a hyperlink trade arrangement among us!

  • Thank you for the good writeup. It in fact was a amusement account it. Look advanced to far added agreeable from you! However, how could we communicate?

  • What i do not realize is in fact how you are not really much more neatly-liked than you might be now. You’re so intelligent. You already know therefore significantly relating to this matter, produced me individually believe it from so many various angles. Its like women and men aren’t involved except it¡¦s something to do with Woman gaga! Your own stuffs excellent. Always deal with it up!

  • Law School says:

    Hey There. I found your blog using msn. This is a really well written article. I’ll make sure to bookmark it and return to read more of your useful information. Thanks for the post. I’ll definitely return.

  • I am no longer positive the place you’re getting your info, but great topic. I must spend a while finding out much more or figuring out more. Thank you for excellent info I used to be looking for this info for my mission.

  • You actually make it seem really easy together with your presentation however I find this matter to be really something which I feel I’d by no means understand. It sort of feels too complex and extremely vast for me. I’m looking forward to your subsequent post, I will try to get the hang of it!

  • I am only commenting to let you be aware of of the brilliant experience my girl experienced visiting your webblog. She learned so many issues, with the inclusion of what it is like to have an amazing coaching character to have certain people without hassle completely grasp several advanced subject matter. You actually exceeded her expected results. I appreciate you for displaying the valuable, dependable, informative and even fun thoughts on the topic to Sandra.

  • Fantastic web site. A lot of useful information here. I am sending it to several pals ans also sharing in delicious. And certainly, thanks on your effort!

  • I have been surfing online greater than 3 hours today, but I by no means discovered any attention-grabbing article like yours. It is lovely worth sufficient for me. In my opinion, if all web owners and bloggers made good content as you did, the net might be a lot more useful than ever before.

  • Thanks a lot for sharing this with all of us you actually recognise what you’re speaking approximately! Bookmarked. Kindly additionally talk over with my site =). We could have a link trade arrangement among us!

  • Wow, marvelous blog layout! How long have you been blogging for? you make blogging look easy. The overall look of your web site is excellent, let alone the content!

  • I wish to get across my respect for your generosity giving support to visitors who need assistance with the study. Your very own dedication to passing the solution all over ended up being exceedingly interesting and has continually made employees just like me to arrive at their targets. Your informative key points entails a whole lot a person like me and even further to my colleagues. Warm regards; from everyone of us.

  • Good write-up, I am regular visitor of one¡¦s website, maintain up the nice operate, and It is going to be a regular visitor for a long time.

  • that’s good, thanks for sharing,.. I think this is great blog

  • I loved as much as you will receive carried out right here. The sketch is attractive, your authored material stylish. nonetheless, you command get bought an nervousness over that you wish be delivering the following. unwell unquestionably come further formerly again since exactly the same nearly very often inside case you shield this increase.

  • that’s good, thanks for sharing,.. I think this is great blog

  • that’s good, thanks for sharing,.. I think this is great blog

  • As I site possessor I believe the content material here is rattling wonderful , appreciate it for your efforts. You should keep it up forever! Best of luck.

Join the conversation

Oops! We could not locate your form.