If buying a home right now is such a great idea, why doesn’t Wall Street want to do it? Think twice — or even three times — before buying a home in this real-estate market. If you need a new place, give serious thought to renting instead.
Even if you really want to buy, at least take a look at the rentals on offer, compare them with what you could buy instead, and do the math. **Read:**30-year mortgage rate posts biggest jump in four years — to nearly 7.3% It will now cost you more than $7,000 extra per year to buy a typical U.S. home than back in February, before the government launched a war against Iran and sent mortgage rates rocketing. Chip stocks have been on a wild ride. What comes next?Play video: Chip stocks have been on a wild ride.
According to some authoritative data, housing affordability may now be the worst ever recorded — worse even than at the peak of the crazy housing bubble 20 years ago. Don’t Short Yourself offers weekly money tips to help you earn it, stack it and grow it. I would like to receive updates and special offers from Dow Jones and affiliates.
I can unsubscribe at any time. Meanwhile, renting keeps getting cheaper. Rents have fallen for 37 months in a row, reports Joel Berner, an economist at Realtor.com (Which, like MarketWatch publisher Dow Jones, is owned by News Corp .) **Read:**The renter generation: Young Americans, shut out of homeownership, brace to rent forever The theory that buying is always better, over time, is a myth.
It depends entirely on the price you pay. Even online calculators have to make assumptions about what will happen to rents, home prices and interest rates over time. Adjusted for inflation, people who bought a home at the peak of the bubble around 2005-07 still haven’t made their money back.
The S&P Cotality Case-Shiller National Home Index, the benchmark for home prices, fell a third in real terms in the years after the bubble burst and is still below the peak. **Read:**This city saw 1 in 3 home sellers slash their asking price in September to attract reluctant buyers Meanwhile, before buying, you might ask yourself: If buying a home right now is such a great idea, why doesn’t Wall Street want to do it? The giant property stocks, real-estate investment trusts that own hundreds of thousands of apartments and single-family homes across the country, have been plunging for months. And when you value them based on the homes they own, you realize that Wall Street thinks the average home is worth about a third less than the real-estate market does.
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