Over the last few years, renters have been spoiled for choice as thousands of new apartments came online at once. That surge created intense competition among property owners, leading to move-in specials and slower rent growth in many markets. Now, the pace of new construction is easing, bringing more balance into the rental space.
Even though mortgage rates and home prices have cooled slightly, the monthly cost of owning a home is still higher than renting in most markets. Rent payments generally take up a smaller share of household income than a mortgage, making it easier to budget and plan.
This affordability gap has had a major impact on millennials, many of whom are now in their late twenties and thirties. These are prime years for forming households, starting families, and settling into careers. Yet higher down payment requirements and lifestyle flexibility have delayed homeownership for many. As a result, the renter population in this age group has grown steadily over the past two decades, creating strong and lasting demand for apartments.
If you are running the rent versus own math, though, realize that a monthly payment calculation only tells part of the story. For those that delay buying a home by 10 years, opting to purchase in their 40s versus 30s, the impact on equity is huge; estimates show an average of $150K less in equity gains over that short period.
For those considering buying a home, a more stable rental market can provide breathing room to save, plan, and wait for the right opportunity, but make sure you are running the longer-term math versus a simple month-to-month calculation.
