The cost of keeping a roof over your head has increased since the start of the pandemic, making it more expensive to sign a lease on a new apartment or buy a home. This may raise the question whether renting or owning a home is financially better in the current environment.
Thank you for reading this post, don't forget to subscribe!A new analysis from real estate firm CBRE is providing some clarity on that question. What this reveals may frustrate home seekers: The cost of buying a home, compared to the cost of renting, is now the most expensive on record – a price gap that dwarfs the gap seen during the housing bubble in 2006. has also crossed.
Buying a home now costs 52% more than renting an apartment, according to CBRE data emailed to CBS MoneyWatch, which covers the monthly cost of a new home purchase versus a new lease from 1996 to the third quarter of 2023. Analysis has been done. By comparison, at the peak of the housing bubble in 2006, it was 33% more expensive to buy than to rent – a difference that rapidly reversed after the decline in housing prices during the Great Recession.
On a dollar basis, that means new homeowners today face monthly costs of $3,322, while those signing a new lease face $2,184.
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“Why would premiums be so big today? It’s really just a math equation, but the situation is very different from 2006, when it last peaked,” said Matt Vance, CBRE senior director and Americas head of multifamily research. ” , “We have a shortage of supply of homes for sale … and then we saw the Fed start raising rates, so it’s really the mortgage rates that are contributing tremendously to that premium today.”
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