One year ago, we published a piece highlighting demand shifting from owning to renting—and we’d like to give you an update. The monthly premium to own versus rent has now hit $1,030 per month, compared to $884 per month at this time last year (see note)—increasing demand for rental homes while reducing demand for homeownership.
Note: historical values do not exactly match last year’s article, as we added a new data source that provides more real-time responsiveness to this metric.
Even higher mortgage rates and still elevated resale prices continue to challenge for-sale housing affordability—resulting in a higher-than-usual number of home renters staying in place and even more buyers moving to the sidelines as they can no longer afford to purchase a home.
While this metric has decelerated from a $1,188 peak in October 2022, it remains much higher than usual.
The premium varies a lot by market and is much less in the Midwest and other markets where homeownership is more attainable.
Interestingly, the monthly homeownership premium is below the national average of $1,030 in 15 of the 20 most popular markets for single-family rental investment, primarily because homes in these markets can be purchased at prices where the rents achieve a good yield for the landlord. In the most expensive markets in the country, such as San Francisco and New York, where the homeownership premium is substantial, single-family rental landlords have not been able to grow their businesses.
As the market continues to evolve, we hope to give our clients clarity with thoughtful insight into where the market is headed. If you have significant investments in housing in any capacity, our research memberships and/or consulting services can keep you more informed than ever, allowing for early decision-making that leads to significant profits. To learn more about our research and consulting services, please fill out this form.
This year, we will hold the inaugural Rental Communities Summit, formerly known as the Build-to-Rent Virtual Strategy Summit, to broaden the discussion and address the crossroads between Multifamily, Single-Family Rental, and Build-to-Rent. Featuring an accomplished group of speakers and panelists, the presentation will address some of the burning issues that will help the industry move forward. If you are interested in attending this virtual event on July 25th, please contact clientservices@jbrec.com.
