The primary obstacle to homeownership has always been the large up-front cost and necessity to get a loan. But the monthly cost of homeownership has generally been lower than rent prices, making homeownership significantly cheaper in the long term. And in 58% of counties right now, homeownership is actually more affordable than renting for the median priced home.
That’s still the case now, but things are trending in the other direction. While home prices, rent prices, and wages are all going up, rent prices are increasing the slowest of the three. There may come a time when home prices have outpaced rent prices enough that renting is a more affordable option, even if you have the up-front cost of homeownership covered. However, it’s important to note that changes in rent prices can sometimes lag behind changes in home prices. Renters usually aren’t able to capitalize on swiftly changing markets because they need to wait for their lease to expire, and in rent controlled areas, landlords can’t raise rents directly to market value for tenant-occupied homes.