In some ways owning a home is cheaper than ever, but first-time buyers still can't catch a break

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It's no secret that home ownership has become increasingly unattainable for many Americans, as home prices rise, sellers demand hefty down payments, and salaries fail to keep up with inflation. But if you're a renter with dreams of climbing on the property ladder, some new data may serve to rub salt in the wound: While rents have been too damn high (and getting higher) for years, the costs of owning a home have actually fallen, according to new numbers compiled by Apartment List.

But how could this be, given that sales prices have been on the rise, too? The disparity is largely due to historically low interest rates, according to Apartment Lists's report, which drastically reduce monthly mortgage payments for existing homeowners, but offer no benefit to current renters. "Our analysis highlights the challenging situation many renters face. Most want to purchase a home, but are unable to afford it. Delaying homeownership has a sizable financial cost, as renters miss out on low mortgage rates and are hit by rising rents. Over time, these trends may exacerbate inequality in our society, and risk locking many Americans out of homeownership," notes the Apartment List report.

This financial disparity seems to disproportionately hit young people, as well as Hispanic and African American would-be buyers:


To pull the data, Apartment List looked at Census information between 2007 and 2014, looking at home ownership rates, and determined median owner and renter costs from the American Community Survey. (And median owner cost numbers include mortgage payments, real estate taxes, insurance, utilities, etc.).

For the New York City market, Andrew Woo, Apartment List's director of data science & growth, says they found that "the homeownership rate fell slightly less (down 4.3 percent) than in the US as a whole (down 4.8 percent). These drops (in New York) were especially big among millennials aged 18 to 34, where it fell by 7.3 percent." As for the monthly costs, their numbers show a 10.1 percent drop for NYC homeowners between 2007 and 2014, but an 8.7 percent increase for renters, as rents have steadily gone up without being offset by economic factors like low interest rates.

For example, say you bought a $1 million property in July 2007, when rates were at 6.7 percent, versus July 2016, when they were 3.44 percent. All other factors being equal (and assuming a 20 percent down payment), the NerdWallet mortgage calculator shows a difference of a $5,162 monthly payment versus $3,565. That's a huge saving as an owner; but if you're a renter, you'd just be paying a steadily increasing rent all that time.

As for the fact that New York sales prices have also climbed higher than ever post-recession, Woo explains: "The Census surveys households to find out their cost of owning a home, so to the extent that there are people who purchased recently (after home prices increased) the cost of owning will increase. Overall, however, it looks like that phenomenon is outweighed by the fall in interest rates, since many homeowners purchased their homes before the price increases."

Yet another reason it's a good time to own NYC property. 


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