Renting Is Still Cheaper Than Buying — but JPMorgan Says US Housing Affordability Is Getting Worse: ‘Incomes Have Simply Failed to Keep Up’
Renting is still cheaper than owning a home in the U.S., but housing costs have outpaced incomes for decades, and high mortgage rates are squeezing buyers, according to J.P. Morgan, as homeownership among those under 35 falls to its lowest in nine years. Renting Is Cheaper, But Not Cheap On a monthly cash-flow basis, renting remains cheaper than owning in most large U.S. metro areas, the brokerage’s analyst Bennett Parrish said on the latest episode of the bank’s ‘All into Account’ global cross-asset strategy podcast, pointing to elevated price-to-rent ratios But cheaper is not the same as affordable. “Affordability is fundamentally about housing costs relative to incomes, and this is where the picture is most troubling,” Parrish added. Housing costs have outpaced income gains for much of the past 25 years. Homeownership among those under 35 has fallen from 39% in early 2022 to a nine-year low of 35%, while older cohorts have been somewhat insulated. “US housing affordability remains near its worst level since the Global Financial Crisis, with a market that’s effectively ‘frozen,'” the firm stated in its note. Read Also: Frank Bisignano Defends Legality of Trump Account Stock Donat
P. Morgan, as homeownership among those under 35 falls to its lowest in nine years. S. metro areas, the brokerage’s analyst Bennett Parrish said on the latest episode of the bank’s ‘All into Account’ global cross-asset strategy podcast, pointing to elevated price-to-rent ratios But cheaper is not the same as affordable.
“Affordability is fundamentally about housing costs relative to incomes, and this is where the picture is most troubling,” Parrish added. Housing costs have outpaced income gains for much of the past 25 years. Homeownership among those under 35 has fallen from 39% in early 2022 to a nine-year low of 35%, while older cohorts have been somewhat insulated. “US housing affordability remains near its worst level since the Global Financial Crisis, with a market that’s effectively ‘frozen,'” the firm stated in its note.
P. Morgan’s John Sim said on the podcast. 32% this week, its highest level since 2002. S.
4%, according to Freddie Mac. The Federal Reserve raised interest rates by 25 basis points last month, and minutes released Wednesday showed most policymakers see another hike as likely appropriate by year-end. 3% month over month in August. Rising insurance and property taxes add to the burden.
P. Morgan sees mortgage rates falling to the mid-to-low 6% range at some point in 2027. Apartment Supply May Be Easing For renters, supply may offer some relief. Analyst Joyce Chang said that the multifamily sector has been working through oversupply after a Sunbelt construction wave, encouraged by low borrowing costs and strong population growth.
5%,” potentially pushing mortgage rates above 8%. He added that a buyer putting 10% down on a $500,000 home pays about $1,900 a month at a 3% rate, but more than $3,600 at 9%, so prices would need to fall nearly 50% to restore the old payment. 50 in early premarket trading on Friday. 76 in early hours.
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