Good news for many: the median sale price of houses sold in the U.S. has come down from its 2022 high of $442,600.
In some cases, renting is a “preferred, long-term lifestyle choice,” according to David Moore, founder and CEO of Knightvest Capital, a multifamily investment firm that commissioned a survey of more than 2,500 renters in September 2024.
But lifestyle can become a Hobson’s choice. A new report from CBRE points to a “significant affordability gap.” Mortgage payments for a new house are on average 35% more expensive than apartment rents. That is more likely the big factor pushing people into renting rather than a home purchase.
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CBRE forecasted annual 3.1% average multifamily rent growth over the next five years. That would be higher than the pre-pandemic average of 2.7%. That’s expected to be higher than the growth in home prices and with expected lower mortgage rates, which would slightly dent the immediate economic advantage renting offers. By the end of 2025, the 35% additional cost would drop to 32%. While better, it still makes renting the more affordable option.
Currently, Austin and Los Angeles have the highest cost-to-buy premiums in the U.S. Homeownership mortgage costs in those metros run almost 2.5 times as much as average rent. Such high-growth markets as Phoenix, Salt Lake City, and Nashville are expected to see the “most significant compression in cost-to-buy premiums.”
“The difference between mortgage payments and rental costs poses a substantial challenge for individuals and families trying to transition from renting to homeownership,” said Matt Vance, Americas head of multifamily research at CBRE, in previously constructed remarks.
Both CBRE and Knightvest Capital pointed to flexibility. But in the latter’s survey, 63% said the price of buying a home was the main reason they continued to rent. Also, 45% didn’t view homeownership as a status symbol.
It also sounded as though many are giving up on the possibility of eventually owning. Last year, the percentage of renters who said they’d be more likely to buy a home if interest rates were lower was 70%. In 2024, it was 60%.
No doubt, becoming a homeowner today has gotten much more unaffordable than in years past. People are taking notice, with many deciding to give up on the dream and rent as a cheaper alternative.
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