Real estate technology platform Cadre recently conducted an analysis of the cost of renting versus purchasing a home over time as depicted in the following chart. The cost of home ownership includes the monthly mortgage payment for the median home as well as estimates of insurance, taxes, maintenance, and so on.
Currently, purchasing a home is 62% more expensive than renting, the largest gap since this type of data began to be collected. This chasm is attributable to mortgage interest rates exceeding 7% as well as the fact that the median home price of $406,700 has risen by 43% since the beginning of 2019. Based on this price, a downpayment of $81,000 is required assuming 80% financing. It is entirely possible that appreciation will eventually outweigh the much higher initial cost of home ownership, but that outcome is uncertain. Meanwhile, the high cost and lack of available homes create a particularly challenging environment for first-time buyers.