Since 2020, something major has happened in the housing marketing and a recent Economist article perfectly captured it.
The article (shows that between 2011 and 2020, the monthly mortgage payment on a typical home was 12% lower than the rental price for a similar property. Meaning that nationwide, just three years ago, it was cheaper for only 16% of Americans to rent as opposed to buy a home.
But now, according to the Economist, it is cheaper for a whopping 89% of Americans to rent a home than it is to buy a comparable property.
In fact, since 2020 nominal house prices have climbed by roughly 40%.
Also, the average 30-year fixed-rate mortgage has risen from 3.1% to 7.3%, causing mortgage payments to more than double.
Meanwhile, rents have risen by only about 20%.
The article discusses that most homeowners are reluctant to sell as they benefit from locked-in mortgage rates much lower than those available to new borrowers. Torsten Slok of Apollo notes that over four in five existing mortgage holders pay an interest rate under 5%.
As a result, market conditions are likely to discourage millions from buying or selling their houses.
So for many individuals, renting has become the most attractive option.
This means that our upcoming investment fund, set to launch in mid-January, is strategically positioned to capitalize on this major shift.
We believe that the evolving real estate landscape presents a unique opportunity for investors seeking diversified and lucrative investment avenues.
If you’d like to discuss this further or if you want additional details about the fund, feel free to reply back to this email or give me a call at (401) 406-8090.