July 19, 2024

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More and more renters are staying put. That’s ‘not going to change anytime soon.’

2 min read

Bryan Tucker began looking for a starter home in the Washington, D.C., suburbs earlier this year. He soon decided it wasn’t worth it.

In Arlington, Va., where he was looking, he found that most options he was interested in were priced over $1 million and way out of his budget. So he decided to renew his apartment lease another year.

“I have looked,” said Tucker, a 27-year-old project manager in the tech industry. “The only options that are really affordable for me for the next year are condos.”

Read more: What percentage of your income should go to a mortgage?

Would-be buyers like Tucker are staying in the rental market longer as the housing market remains out of reach for many. Apartment owners have noted on recent earnings calls that the share of renters moving out to buy homes is at record lows.

Multifamily and single-family rental REITs across the country have reported strong appetite for new and renewal leases as home ownership remains unaffordable for many. (Photo by John Tlumacki/The Boston Globe via Getty Images)

Multifamily and single-family rental REITs across the country have reported strong appetite for new and renewal leases as home ownership remains unaffordable for many. (John Tlumacki/The Boston Globe via Getty Images) (Boston Globe via Getty Images)

“The monthly cost of owning a home today is 61% more than leasing an apartment,” Richard Campo, CEO Camden Property Trust (CPT), a Houston-based owner of 58,000 apartment homes, said on the company’s first quarter earnings call in early May. “This is not going to change anytime soon.”

Mortgage rates are currently hovering around 7%, continuing to make borrowing expensive for potential buyers. Higher rates have also convinced many current homeowners to delay moving since they financed their homes at lower rates. That’s kept a lid on supply and helped drive home prices sky high.

Home prices hit fresh records in March, according to the latest data available from Case-Shiller. Economists at Bank of America expect home prices to grow 4% this year.

Camden said that just 9.4% of move-outs in the first quarter were due to its residents buying a home — the lowest in history.

Similarly, AvalonBay Communities (AVB), a REIT that owns…



2024-06-15 08:17:34

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