More bad news for anyone who wants to ever own a home: Home prices just went up again. The S&P CoreLogic Case-Shiller U.S. National Home Price Index rose 6% in January, data released today shows; that’s up from a 5.6% increase in the previous month, setting the fastest annual gain since 2022. “On a seasonal adjusted basis, home prices have continued to break through previous all-time highs set last year,” Brian Luke, head of commodities for S&P Dow Jones Indices, said in an accompanying statement.
Renting isn’t necessarily affordable either, but it is cheaper than buying, and could be for years to come, according to Capital Economics. That should show just how unaffordable buying has become in a housing market beset by sky-high home prices and mortgage rates that more than doubled in a short period of time. Still, “as mortgage rates fall, we think the difference between the cost of buying and renting will narrow from the current all-time highs,” Capital Economics’ property economist, Thomas Ryan, wrote in a new housing market update. “But even by 2026, renting will remain by far the more cost-effective option.”
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Capital Economics recently said the national average house price has risen almost 50% since the start of the pandemic. And in this note, Ryan wrote that rent as a share of disposable income among 25- to 34-year-olds was 40.5% as of the fourth quarter of last year, dipping from a peak of 41.6%. So clearly, both rents and home prices are costly.
Who gives a shit about a couple years when people regularly buy 30 year mortgages? How much would rent increase over that timeframe?
I’d be moreso worried about the eventual housing market collapse. I believe there is legislation being discussed that would force corporations to sell of their house holdings within the next 5-10ish years. I imagine that as soon as investment groups aren’t allowed to make the obscene amounts of money they have been by abusing the housing market, is when the bottom will fall out. Fits with the rich mentality of privatizing profits while socializing pain.
That would absolutely not pass. Housing corps have far too much influence in politics. A lot of politicians have real estate investment interests too.
Zero chance that legislation passes. As amazing as it would be, roughly zero politicians would vote for it. Sure, you might get Bernie on board… maaaaaybe AOC, but that’s about it. Although the long term would be so much better for the US, the short term crash would be bad for corporations, rich people, and for recently and soon-to-be retired people.
Every retirement fund in existence is banking on housing investments. Which is exactly why the sooner it crashes the better. Rip the bandaid off. Let people have a place to live.
Not like most people born this century ever expected to retire anyway.
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Meh, we’ve been through those results before in 2008. Homelessness and unaffordable housing is a much larger problem than rapid housing value declines. The worse case of housing value decline is personal bankruptcy which is a paper exercise you can financially recover from in 5-7 years of effort.
The worst case of homelessness or unaffordable housing is death.
Let’s say an 18 year old moves out and starts renting
The average rent in US is 1.5k
30 years of payment is 540k
When that person is 48, they would have paid 540k in rent expenses
This is assuming that rent doesn’t increase
Throwing 600k out the window before you’re even 50 is not a recipe for success
76 is US average life expectancy. That’s ~25 more years of rent.
If they retire at 63. 13 years of 1.5k a month rent is 234k. They need a quarter million in retirement funds just for rent to live up until 76.
45 years of working for that 18 year old would need to make ~750k.
That’s 16.5k a year just to pay for rent
Again this is assuming rent never goes up.
That’s 8 dollars an hour 40 hours a week every week.
10% more than minimum wage, just for rent.
It’s crazy
And this assumes you die and don’t have to rent after the age of 76