The national median monthly mortgage payment for homebuyers rose 67% faster than rents during the same period, according to a new report from Redfin.
This is despite mortgage interest rates falling back to near-record lows. This is the seventh consecutive month that growth in median mortgage payments for new homebuyers have outpaced that of rents, the company said.
Mortgage payments for new homebuyers outpaced rent price increases in 25 of the 50 largest metro areas in the US during August. Nationwide, the average monthly rent of $1,836 is still larger than the $1,494 median monthly mortgage payment for new homebuyers.
“Record high home price growth has priced many renters out of buying, leaving many facing higher rents this summer as more households look to move thanks to the rise of remote and flexible work arrangements,” said Taylor Marr, Redfin’s lead economist. “The end of pandemic eviction moratoriums and mortgage forbearance may also cause landlords to raise rents to cover the risk of future tenant protections or make up for lost rental income.”
This has had a big impact on some cities.
“Austin has always been a hot real estate market, but the past six months have been wild,” said Jennifer Hoffer, Redfin Austin market manager. “We’ve been working with several landlords who want to sell their properties to cash in on high home prices. But renters right now really don’t want to move, so they’re staying put with long-term leases because they have nowhere to go. I think we will see a spike in rents in the next few months as leases come to an end.”
Most of the metro areas with the biggest increases in rent were warm, affordable destinations in Florida, California and Arizona that have benefitted from a surge in migration thanks to a newly mobile workforce. However, rents are not increasing everywhere.
A few metro areas saw decreases, including expensive areas where people are moving away, like the Bay Area.