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NerdWallet's Smart Money Podcast
Money News: Should You Rent or Buy Amid Rising Interest Rates?
Nov 1, 2023
The Nerds discuss UAW strike, GDP growth, debit card fees, and AI executive order. They invite Je from Zillow to talk about the impact of rising interest rates on renting vs. buying a home. They explore factors like housing inventory and challenges faced by first-time homebuyers.
22:36
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Quick takeaways
- The cost of home ownership has increased rapidly in recent years, primarily due to rising mortgage rates and the substantial increase in home prices, making renting a more affordable option.
- When deciding to rent or buy a home, it is crucial to assess the finances of buying a home and set a realistic monthly budget that aligns with one's financial goals, spending needs, and saving priorities.
Deep dives
Housing affordability: Rising mortgage rates make renting more attractive
The home buying market has become more expensive compared to renting due to a spike in mortgage interest rates. The average monthly mortgage payment is now more than 50% higher than the average rent. The cost of home ownership has increased rapidly in recent years, primarily due to rising mortgage rates and the substantial increase in home prices. Down payments are also becoming more challenging for first-time buyers, leading to longer saving periods and an increasing reliance on down payment assistance programs and family support. Additionally, inventory levels in the housing market have been low, creating a scarcity of available homes and driving up prices. As a result, renting has become a more affordable option, particularly as landlords offer concessions and renters become more cautious about budget management.
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