Buying a house can be a great long-term investment for generating wealth across generations. However, determining the right time to buy can be challenging. One helpful benchmark is the rent ratio, which compares the cost of buying to the cost of renting. To calculate the rent ratio, multiply the monthly rent for a similar house by 12 to get the annual cost of renting. Then divide the home price by the annual cost of renting. This ratio can give you an idea of whether it's a good time to buy or wait for potential changes in interest rates and prices.
For many millennials, buying a home has become almost entirely out of reach. Average 30-year mortgage rates are hovering around 7 percent — the highest they’ve been since 2007 — largely because of the Federal Reserve’s efforts to tame inflation.
David Leonhardt, a senior writer for The New York Times, discusses whether it is time to change how we think about buying vs. renting.
Guest: David Leonhardt, a senior writer for The New York Times. He writes The Morning, The Times’s flagship daily newsletter, and also writes for Sunday Review.
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