You may not like the answer. In the category: “Things you should know, but would rather not,” comes some info on the status of housing.
According to a recent ATTOM Data Solution’s Rental Affordability Report, buying a median-priced home is more affordable than renting a comparable property in about 54% of the counties reviewed. Sounds good for mortgage lenders, eh?
Don’t get too excited. The same report indicates that about 64% of the population lives in the fewer counties where it is less costly to rent than buy.
According to Daren Blomquist, vice president with ATTOM Data Solutions, “Although buying is still more affordable than renting in the majority of U.S. housing markets, that majority is shrinking as home price appreciation continues to outpace rental growth in most areas.”
Unfortunately for lenders, it seems to rent has become the lesser of the two evils resulting from rising home prices in about 76% of the counties with a population of 1 million or more. So, more people now live where it is cheaper to rent than buy. Not so good for mortgage lenders.
As I’ve mentioned in prior blogs, 2018 will bring us a purchase market, but it will still offer some opportunities for refi’s if rates stay relatively low. Maybe with more people renting, we’ll see a rise in rental rates balancing the expense of buying and renting.
Also, some consumers may be renting today because they can’t buy due to past credit problems left over from the crash. Or, they are just not yet ready, or in a position, to buy, i.e. Millennials. That may change in 2018.
These reports are a look back not forward. It’s good to know where we’ve been, and where we are, but we also want to take a look at where we may be going.
With tax reforms and an improving economy, we may find more people making a move toward homeownership.
Such moves will provide more opportunities for lenders. Those that have prepared to take advantage of such opportunities, when they arise, will obviously benefit the most.
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