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Many renters are making moves toward homeownership as quickly rising mortgage rates and rents have them feeling increased pressure.
Average monthly rents climbed more than 14% year over year in December 2021, reaching $1,877. Miami and Austin, Texas, have seen rents surge more than 30% over the past year.
Economists point to homeownership as a way to stave off inflation and build wealth, The Wall Street Journal reports. But higher rents are making it tougher to save for a down payment to buy a home.
Real estate pro Brooke Baenen in Green Bay, Wis., told The Wall Street Journal that one of her first-time home buyer clients—in her 40s and a lifelong renter—was motivated to start looking to buy a home as her rent skyrocketed. At first, her client’s rents rose by $50 a month and then by $200 a month. She’s had other clients in similar situations who are paying higher prices for small apartments with rents similar to big-city prices.
Some renters may find a mortgage payment, with still historically low interest rates that are under 4%, may cost them about the same as or less than their increased rent costs.
“If you’re spending $2,400 a month in rent, that could be equity in a home,” Audrey Chaney, a real estate professional at Realty ONE GroupComplete and Acre & Co. in Sacramento, Calif., told The Wall Street Journal. “If you do that for two years, it’s almost $50,000.”