Renters are feeling the strain on their wallet this year as rent prices continue to surge. The nationwide median rental rate has exceeded $2,000 a month (Genovese). Texas has been hit the hardest at a 48% increase in a year, but locally in Pennsylvania renters are feeling the increase as well. Rent in Philadelphia and Pittsburgh has increased over 13% and 15%, respectively (Redfin), and that percentage hovers around that amount here in Lancaster as well. Some may wonder with these rent increases if it may be better to buy a home instead.
However, increasing home prices and climbing mortgage rates are making homebuying a difficult goal to accomplish as well. The American Dream of owning a home may be on hold this year for many who otherwise would be in the market. “Inflation has hit a new 40-year high” (NPR) continuing to make rates soar and prospective buyers simply cannot afford to purchase a home these days. A 30-year-fixed mortgage was just under 3% last year but has now jumped to over 6% as of June 2022 (CNBC). Meanwhile, the actual cost of homes has also been rising, and experts think we will continue to see houses selling for 15 to 20 percent more than they would less than a year ago (Martin). The percentage of people looking to buy has decreased as it is now just too expensive, causing a demand for more rentals, thus a rise in rental rates.
Still, renting is more affordable in many cases since “mortgage payments have surpassed rents on many homes” (Genovese), and this does not include all the other costs associated with being a homeowner, such as repairs, maintenance, and utilities, as well as a big down payment that may be required for most home purchases. While monthly rent is at a high, it may be more feasible to lease for those who cannot afford the record-breaking interest rates and costs associated with buying in these economically troubling times.
References / Works Cited
Ellis, Tim. “Rental Market Tracker: Typical U.S. Asking Rent Surpassed $2,000 For First Time in May”.Redfin News. June 9, 2022. https://www.redfin.com/news/redfin-rental-report-may-2022/
Genovese, Daniella. “Rent Prices Surge Nationwide in May, Texas City Hit Hardest”. Fox Business. June
“Housing Prices Soar With Rising Inflation.” NPR. June 11, 2022.
Martin, Erik J. “2022 Summer Housing Market Predictions”. Bankrate. June 6, 2022.
“Mortgage Rates Spike as Inventory Rises”. CNBC. June 13, 2022.