Buying a Starter Home Costs $1,000 More Per Month Than Renting, Compared to a $233 Average

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Starter Home Costs More Than Renting

A new study by John Burns Research and Consulting reveals that purchasing a starter home still costs, on average, $1,091 more per month than renting the same property. While this gap has narrowed from a peak of $1,349 in October 2023, it remains significantly higher than the historical average of just $233.

Rising home prices, elevated mortgage rates, and tight housing supply continue to fuel demand in the rental market, with tenants staying longer and landlords seeing steady rent growth, especially with renewals. In some markets, like Austin, the premium to buy a home is as high as $1,900 per month, while in places like Cincinnati, it’s just $4

As for a potential solution, experts say mortgage rates would need to fall to about 3.75% for homeownership costs to return to the historical 14% premium over renting. In the meantime, many homebuilders are helping buyers by offering mortgage rate buydowns.

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Fannie Mae Forecasts Housing Market Slowdown

According to Fannie Mae’s December 2024 economic outlook, the housing market is unlikely to thaw in 2025 due to ongoing affordability challenges and the “lock-in effect,” which keeps homeowners from listing their properties. Existing home sales are expected to remain near 30-year lows, with only a slight increase from recent levels.

Fannie Mae economists predict mortgage rates will decline modestly but stay above 6%, with occasional volatility. While new home sales could see growth where construction is strong, national home price growth is expected to decelerate. Multifamily housing will remain in a holding pattern.

Despite these challenges, wage growth is expected to outpace home price growth for the first time in over a decade, providing some relief for would-be buyers. However, regional differences will persist, with strong activity in the Sun Belt but supply constraints continuing in the Northeast.

You can read the full report at fanniemae.com.

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Alexander Brothers’ Scandal Shakes Real Estate

The downfall of the Alexander brothers, once rising stars in luxury real estate, has taken a devastating toll on their former brokerage. The Department of Justice is now investigating their time at Douglas Elliman, where Oren and Tal Alexander became celebrity brokers, representing high-profile clients like Kanye West and Jay-Z. Bloomberg reports that Douglas Elliman is cooperating with the inquiry and providing internal reviews of their behavior.

The brothers, who left Elliman in 2022 to found the luxury firm Official Partners, have recently been arrested on federal and state sex trafficking charges. Allegations against them include running a decades-long scheme to exploit women, with lawsuits dating back to March. The Alexanders face multiple civil suits and have denied the charges, with their lawyers indicating they will plead not guilty.

Their arrests have left Official Partners in ruins. The co-founders have already left, and the brokerage is now embroiled in a legal battle with Side, which is suing for over $4 million in unpaid debt.

The Alexanders are currently being held in detention as they await bond hearings. Prosecutors argue they pose a flight risk due to their wealth and global connections.

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