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It's Now Twice As Expensive To Buy An Entry-Level Home Than Rent
Mish Talk ^
| 08/23/2025
| Mike Shedlock
Posted on 08/24/2025 6:58:42 PM PDT by SeekAndFind
Thinking of buying a starter home? Be careful!
The above image from John Burns Research.
Burns Criteria
- Home payment, entry-level home mortgage
- 5 percent down, 30-year fixed mortgage
- Principal, Interest, Tax Payments, and Insurance (PITI) payment plus mortgage insurance payment
- Annual maintenance costs ranging from 0.85 percent to 1.25 percent of home price
One might put down 10 percent to avoid mortgage insurance.
Looking ahead Burns see homeownership costs stubbornly high, 95 percent premium all the way through 2028.
That means home prices remain stubbornly high, mortgage rates remain stubbornly high, or the cost to rent drops.
20-City Comparison
The above image from John Burns Research via Realtor.Com article Top 20 Markets Where It’s Cheaper to Rent than Own a Single-Family Starter Home
Austin is the worst place to buy a starter home by percent and dollars.
In dollar terms, Denver is second. In percentage terms, Las Vegas is second. Phoenix and Riverside are high up the unaffordable list.
Better to Rent or Buy Calculator
The New York Times has a Better to Rent or Buy Calculator (free link, updated July 2025).
The NYT says the “winning choice is the one that makes more financial sense over the long run, not necessarily what you can afford today.”
The NYT philosophy assumes you can survive the short-term and you know where home prices are headed.
I know first hand of people who miscalculated what they can afford and now need tenants to manage.
A recession or job loss will complicate things greatly for millions.
The Housing Top Is Likely In, Case-Shiller Home Prices Drop Again
On July 29, 2025, I commented The Housing Top Is Likely In, Case-Shiller Home Prices Drop Again
Prices are now down the third consecutive month. [But it does not even register on a chart.]
Demographically, the upcoming boomer die-off will add tremendous supply to the housing market. Shutting down the border will slow the rate of current demand.
As a counter-balance, The Number of Housing Units Under Construction Continues to Crash
 The impact on rent will be whether or not builders overbuilt.
The Fed Is Incompetent by Design
Blame the Fed for wild swings in housing affordability.
I discussed this in Fedthink! The Fed Is Incompetent by Design and Can’t Be Fixed
Today’s Pertinent Conclusion
We are trapped in “Fedthink”, especially the nonsensical proposition that two percent inflation is a good thing despite the fact that the Fed is clueless on how to measure inflation in the first place.
The Greenspan Fed, Bernanke Fed, Yellen Fed, and the Powell Fed all ignored housing prices as a measure of inflation.
Yellen even wanted to make up for lack of not enough inflation.
Powell Admits Prior Monetary Framework Was Hugely Flawed
At the annual Jackson Hole meeting this year Powell Admits Prior Monetary Framework Was Hugely Flawed
The Fed just announced a new monetary framework. Is it any better?
The short answer is the new framework is nearly as flawed as before, and the Fed still holds many disproved economic theories. See above for details.
TOPICS: Business/Economy; Society
KEYWORDS: housing; property; realestate
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To: SeekAndFind
Is there a market where you can “short” home values in Austin, Vegas and Denver?
2
posted on
08/24/2025 7:01:30 PM PDT
by
montag813
To: SeekAndFind
Bernie Sanders: Gosh, I’m glad I bought all three of my mansions a long time ago. Grifting today can barely keep up.
Politics is a tough life now.
3
posted on
08/24/2025 7:05:27 PM PDT
by
frank ballenger
(There's a battle outside and it's raging. It'll soon shake your windows and rattle your walls. )
To: SeekAndFind
“My nephew became a CEO at age 23. He’s 25 now and owns 4 houses. So this article is wrong.”
“I bought my first house in 1980 and interest rates were 19%. It wasn’t easy, but I made it work. Young people today just need to pull up their boot straps.”
“If young people just stopped buying coffee at Starbucks, they could afford to buy a house.”
A lot of older people fail to grasp how much this country has been fundamentally changed.
4
posted on
08/24/2025 7:06:24 PM PDT
by
ClearCase_guy
(Society has no reward for following the rules any more)
To: SeekAndFind
Tell me about it. My rent is $1300/month. A $350k house (cheapest in my area) is $2500/month for mortgage with 20% down!
It’s conpletely financially unfeasible for me to buy a house at that rate!
5
posted on
08/24/2025 7:10:28 PM PDT
by
Skywise
To: ClearCase_guy
To: ClearCase_guy
I agree. It depends where you buy. My daughter and her husband are looking to buy in Oklahoma and the houses are fairly cheap and rent is comparable to the mortgage payment.
To: Skywise
But better in the long run as rents go up.
8
posted on
08/24/2025 7:13:07 PM PDT
by
moviefan8
To: SeekAndFind
I read somewhere that it’s a wash between buying and renting. The trick is to put what you save by renting into a solid stock index fund. Unfortunately, most renters don’t do that.
As for me, I bought. When I sit on my back porch, I don’t want any idiots within earshot. But that’s just me.
9
posted on
08/24/2025 7:13:08 PM PDT
by
Leaning Right
(It's morning in America. Again.)
To: ClearCase_guy
For one thing, people need to lower their dreamy expectations and find a home they can afford, dream houses are for rich people.
10
posted on
08/24/2025 7:21:06 PM PDT
by
ansel12
((NATO warrior under Reagan, and RA under Nixon, bemoaning the pro-Russians from Vietnam to Ukraine.))
To: SeekAndFind
We’ve seen the top in terms of housing prices, I think. My house in TN sold for $350K - 6 months ago, I’d have probably gotten $380-390K for it.
But it still sold reasonably fast. Very good agent there BTW - she was very candid in what was going on in the market. But you could see the price changes over that time frame on comparables.
I think that deleting a few million ILLEGALS will help things out a good deal because will free up some property for Americans, and take away the upward pressure on housing in general.
11
posted on
08/24/2025 7:26:03 PM PDT
by
meyer
(CONGRATULATIONS WORLD, IT’S TIME FOR PEACE!)
To: Skywise
That’s nuts. Sad to hear that.
12
posted on
08/24/2025 7:26:06 PM PDT
by
vpintheak
(Screw the ChiComms! America first!)
To: SeekAndFind
5 percent downIf you can only scrape up 5% down, you can't afford that house. And I realize that means that with the investment bankers buying up inventory, and refugees from California running up house prices, many folks can't afford to buy a decent house in this market.
13
posted on
08/24/2025 7:27:04 PM PDT
by
PAR35
To: SeekAndFind
Parents bought first home for $19,000 in 1964 in a “newer” suburb. Now it is “worth” $400,000. I guess it may be my age, but that seems high, as does most everything to me now.
14
posted on
08/24/2025 7:29:19 PM PDT
by
PghBaldy
(12/14/12- 930am -rampage begins... 12/15/12 - 1030am - Obama team scouts photo-op locations.)
To: SeekAndFind
When I was a 8 yar old kid, my step-father took me to job sites to save on babysitting costs.
I built a house for my daughter.
You know what the real cost problem is?
It is all politics.
Democrats cannot stand to have people independent
of their rule!
Material wise, a single family house is cheap, till all the
Political BS comes into play.
So you won’t stop reading,
I have two large houses, a large workshop, and acreage in Hawaii cheaper than a dumpy house in Sacramento costs!
I’m retired! I built most everything I have.
Despite living in a single party Democrat state.
15
posted on
08/24/2025 7:35:10 PM PDT
by
rellic
(No such thing as a moderate Moslem or Democrat )
To: All
Thank you Blackrock!!!!
But cheer up folks!
One of these days, in the not too distant future, when companies like Blackrock, Vanguard and other corporate behemoths (and the governments) own nearly all the homes and apartments, the rents will become just as prohibitively expensive as ownership.
To: moviefan8
Rents go up AND when you walk away from a rental property you’ve lived at for 10 years, you leave with some furniture and the clothes on your back. When you leave a house you’ve owned for ten years you leave with lots of cash in your pocket...
17
posted on
08/24/2025 7:36:35 PM PDT
by
GOPJ
(Superman joined ICE - - Lex Luthor drinks Bud light, drives a Jaguar and is a registered democrat)
To: SeekAndFind
“You vill own nothing and you vill be happy”. We were told this, I don’t know what people expect. It’s not like Americans will sell their home below the maximum bidder to make sure it will end up in the hands of a young family.
18
posted on
08/24/2025 7:39:55 PM PDT
by
bak3r
To: PghBaldy
The base price for a 1964 Ford Mustang was $2,368. The average rent was $115 per month. Going from $19,000 to $400,000 is mostly due to inflation.
To: SeekAndFind
probably cheaper to stay at a extended stay suite.
20
posted on
08/24/2025 7:51:48 PM PDT
by
stylin19a
("Death Smiles At Everyone - Marines Smile Back" - 250 years of smiling - 11/10/2025)
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