Whether you're buying or renting, there is no escape from soaring housing prices. The average existing home price hit an all-time high of $375,300 in March, according to the National Association of Realtors. That is a 15% increase from a year ago. At the same time, the median rent price jumped 17% in the past year to more than $1,900. That has prompted a sense of doom and gloom among renters who fear they'll never become homeowners.
The biggest factor in these surging prices continues to be lack of inventory. "There are 73 million millennials who are coming of age, and there aren't enough homes to put them all in," says Mark Johnson with Dallas-based JP & Associates Realtors. "Then you have about the same number of seniors turning 65, and they're not downsizing yet. So you have this tremendous imbalance in supply versus demand."
Looking ahead, Johnson believes prices will remain elevated, although not necessarily at the historic growth pace we've seen in the past couple of years. "Many of the economists I'm talking to are seeing in the next five years, price appreciation slowing down, but still at a very good clip," he says.
As for what a prospective buyer or renter is to do, Johnson recommends talking to a financial advisor with an ultimate goal of buying. "As we have shortages and as properties flip for major investors, rents are driving up," he tells KTRH. "That makes the buy vs. rent scenario more compelling toward buy...since many rents are now more expensive than mortgage payments."
"When you do the math over time, the wealth of a homeowner is almost 40 times that of a renter," he continues. "You have to live somewhere...you're either going to pay rent, or you're going to pay yourself through a mortgage."
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