Related Articles: Real Estate, All

Buying Still More Affordable Than Renting

To illustrate rising home prices in the area, last month we saw a median home price sell in for $543,500. This figure shows a 17 percent jump in price from last year and even broke the previous peak of $501,000 that we saw seven years ago.

Many attribute the rising median home prices to the shortage of homes for sale on the market in the Seattle area. This shortage has also begun to increase mortgage rates, however these rising figures still do not quite trump the cost of renting on the whole.

For example, the median home price in Seattle cost the buyer roughly 22 percent of their income, according to a Zillow report taken in July. Renters on the other hand are spending up to 30 percent of their income on their rental.

This trend is not exclusive to the Seattle area alone, as a large number of metropolitan areas in the country keep with this trend of rental affordability falling short of buying affordability.

Rental affordability has chiefly been harder since rental property costs did not plunge the way that home prices did in the midst of the recession. Lower mortgage rates during the recession also made buying more affordable than the unaffected cost of renting.

Though at the moment renting is less affordable than buying in the Seattle area, this trend may not continue for long, as Zillow predicts that Seattle area homes will continue rising and at a relatively rapid pace. In fact, home values in the area are predicted to rise 5.8 percent over the next year, which is more than double of what is predicted for the national growth. ~ By Michael Bain

Michael Bain is an analyst for New Home Source