Home prices have increased across most of the nation while affordability in the rental market has actually improved
Jan. 22, 2025
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Home price growth is keeping many would-be homebuyers from purchasing a home.
The transition from renting to homeownership is becoming more challenging as home prices remain high and mortgage rates stay around 7%. At the same time, average rents are stabilizing or even becoming more affordable. Analyzing data from housing market platform Redfin, National Mortgage Professional reports that by December 2024, renters needed an annual income of $63,680 to afford the median monthly rent of $1,592 for an apartment. This is a slight 0.4% decrease from December 2023 and a 6.4% drop from August 2022, when rents peaked at $1,700. This means renters now need over $4,300 less annually to afford typical apartments compared with the 2022 high.
“The affordability gap between renting and buying is likely to widen further in 2025, as home prices rise and mortgage rates remain high. That means potential homebuyers – especially from younger generations – may decide to continue renting for longer, as it’s the only affordable option,” Sheharyar Bokhari, senior economist at Redfin, said in a press release.Read more
