Current Affordability Levels Offer 'Worst of Both Worlds'
Renting is more affordable than homeownership, say approximately 78 percent of Americans in a forthcoming Freddie Mac survey. This share of respondents has grown by 11 percent in six months.
Additionally, demand for for-sale housing may weaken in the months leading up to the year's end, as the share of renters who say they don't intend to buy a home grew four percent from February 2018 to 58 percent, per the survey data. In a reversal of post-recession trends, rental price growth has slowed down with inflation over the past few quarters, and supply is at a thirty-year high, all while home price growth continues and interest rates for home loans rise, Realtor.com reports. Freddie Mac president David Brickman says, “It’s the worst of both worlds,” as renting is still unaffordable for most families, even if it's more affordable than homeownership.
Demand for rentals swelled after the recession, as millions of families lost their homes to foreclosure and tight credit made it difficult for young people to buy homes. Rents rose by double-digit percentages in many cities and the share of families who couldn’t afford their rent swelled to record highs. Meanwhile home prices plummeted and, for those who could qualify for mortgages, it was a great time to buy.