Do you know one or more of the many would-be buyers who can’t afford to enter the housing market? Given still-high interest rates and a dearth of existing homes, they are in a tough spot. But for some of these people, there’s an offsetting upside.
They might be able to justify an amenitized, higher-end apartment community, and wind up enjoying a superior quality of life than they might in a for-sale first home.
A study out today from CBRE revealed what the authors described as “a significant affordability gap” between homeownership and renting. There exists a yawning gulf of 35% between average monthly mortgage payments for new homes and rents for apartments, fueled by the 75% surge in average mortgage payments since late 2019. That wave, CBRE stated, has created “a steep financial barrier to homeownership for many households.” The premium to buy a home is expected to fall in coming years due to interest rate and home price changes. But, CBRE reported, “is it expected to remain wide enough to keep many people in the rental market for longer.”
This reality hasn’t been lost on apartment building developers. An increasing number of upper-crust rental buildings in U.S. cities are duking it out to appeal to a renting cohort prizing aesthetics, convenience and distinctive in-house experiences.
Cases in point: The for-rent residential buildings The Ellery in New York City and 2000 Biscayne in Miami, which both quickly topped the half-leased mark. The latter notched the 50% milepost in November, following a June launch, while the former reached that benchmark in late August, not long after inaugurating leasing in May.