The differences between the housing markets in 2020 and 2023, as well as the areas where the market is more favorable to buyers or renters, are depicted in recently released statistics.
In a housing market that is constantly changing, many people are wondering if they should buy or rent.
The differences between the housing markets in 2020 and 2023, as well as the areas where the market is more favorable to buyers or renters, are depicted in recently released statistics.
The Economist examined American data. In order to compare housing and rental prices across the United States during and after the coronavirus epidemic, Zillow, the Census Bureau, the Department of Urban Development, and the Federal Housing Finance Agency were consulted.
They said:
In America, first-time homebuyers have long had cheaper housing prices than tenants. A median home’s monthly mortgage payment was 12% less between 2011 and 2020 than the rental price for a comparable property (assuming a deposit of 13%, the current national average). Home values have increased steadily over the last ten years, averaging about 7% annually, which has guaranteed that buyers have equity in their properties. However, the decision between buying and renting now appears different, as our maps below demonstrate.
Put the blame on rising mortgage rates and home prices. Nominal home prices have increased by around 40% since 2020, yet the average 30-year fixed-rate mortgage has increased from 3.1% to 7.3%. While rents have only increased by roughly 20%, nominal mortgage payments have more than doubled since 2020. According to our findings, renting a two-bedroom apartment now costs less for 89% of Americans than purchasing a comparable home. It was 16% three years prior.
The article claims that whereas rents have increased by about 20% nationwide since 2023, mortgage payments have more than doubled.
Almost all of Illinois was ranked as being less expensive to purchase in 2020, but by 2023, the figures had begun to change.
Parts of the Chicago area are now marginally less expensive to buy, but few are at the levels observed just three years ago, according to maps created by The Economist.
The change from buying to renting was also emphasized in a recent New York Times article, which quoted Mark Zandi, Chief Economist of Moody’s Analytics, as saying “this is not the time to buy for most people.”
Zandi mentioned less inventory as well as high mortgage rates and home costs.
For those wishing to buy a house, the news isn’t all dire.
Nonetheless, CNBC revealed this week that mortgage rates are beginning to decline. According to the report, “the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 7.41% from 7.61% and points decreased to 0.62 from 0.67 (including the origination fee) for loans with a 20% down payment.”
“U.S. bond yields continued to move lower as incoming data signaled a softer economy and more signs of cooling inflation. Most mortgage rates in our survey decreased, with the 30-year fixed mortgage rate decreasing to the lowest rate in two months,” Joel Kan, deputy chief economist at MBA, told CNBC. “Mortgage applications increased to their highest level in six weeks but remain at very low levels.”
Weekly mortgage applications to buy a house rose by 4%, but they remained 20% less than a year ago.
“The average loan size on a purchase application was $403,600, the lowest since January 2023. This is consistent with other sources of home sales data showing a gradually increasing first-time homebuyer share,” Kan stated.
The demand for mortgages is rising slightly from historical lows, but the housing market is still very fragile. According to a recent National Association of Realtors study, existing home sales in October reached their lowest point in 13 years.
This week, mortgage rates modestly decreased, but economists do not anticipate any significant changes anytime soon.
Rates are currently about 75 basis points more than they were at this time in 2022 and more than double what they were in 2021, according to CNBC, even though applications to refinance a house have also climbed recently.
“The average loan size on a purchase application was $403,600, the lowest since January 2023. This is consistent with other sources of home sales data showing a gradually increasing first-time homebuyer share,” Kan stated.
Meanwhile, a recent National Association of Realtors survey states that October sales of existing houses fell to the lowest level in 13 years.
Lawrence Yun, the chief economist for the NAR, stated in a statement last week that “mortgage rates were at their highest during October, and contract signings for existing homes were at their lowest in more than 20 years.” “Recent weeks’ successive declines in mortgage rates will help qualify more home buyers, but limited housing inventory is significantly preventing housing demand from fully being satisfied. Multiple offers, of course, yield only one winner, with the rest left to continue their search.”
Still, if you’re trying to buy a property, don’t anticipate things to drastically improve.
Matthew Graham, chief executive officer of Mortgage News Daily, stated that “the market has clearly shifted gears into holiday mode with light volume and liquidity, greasing the skids for random volatility without any fundamental justification.”
