For many aspiring homeowners, the dream of owning property has been delayed by a relentless combination of high mortgage rates, record home prices, and low inventory. In today’s market, renting has emerged as the most logical choice for countless Americans, particularly first-time and younger buyers. With the Federal Reserve showing no signs of cutting rates in the near term, the path to homeownership remains steep for most.
The Cost Gap: Renting vs. Owning
Graph Source: Wall Street Journal, CBRE Research, CBRE Econometric Advisors, Freddie Mac, U.S. Census Bureau, Realtor.com®, FHFA
Note: The data assumes a 10% down payment and includes private mortgage insurance.
The disparity between renting and owning has widened to historic levels. As of October, the median existing-home price hit $392,000, a record high. Meanwhile, mortgage rates have surged, shrinking purchasing power for homebuyers. For instance, a $2,000 monthly budget that once secured a home worth over $400,000 now caps out at just $295,000. Buyers face the dual challenge of higher costs and fewer options, as a severe housing shortage keeps prices elevated.
A 2023 CBRE study highlights that renting is now 52% cheaper than buying for new homebuyers, on average. In high-cost cities like Seattle, Austin, and parts of California, that gap widens to an astonishing 175% or more. Renters are paying $2,184 per month, while new homeowners face an average monthly mortgage of $3,322 — the largest cost gap on record.
Graph Source: Bankrate.com
Note: Based on a standard 30-year fixed mortgage, with a 20% down payment
The Impact on First-Time Buyers
The affordability crisis is hitting first-time buyers hardest. Historically, 38% of buyers were purchasing their first home, but that figure dropped to 33% in 2023. The median age for first-time buyers has also risen, from 33 years old in 2021 to 35 today, reflecting the increasing challenges of entering the market.
The shift is reshaping the landscape. With the financial burden of homeownership climbing, the demand for rentals — particularly multifamily properties — is surging. Renting offers a cost-effective alternative that aligns with current economic realities, pushing more people toward multifamily living.
Source: Wall Street Journal, National Association of Realtors
Multifamily Investments: A Prime Opportunity
The rising cost of single-family homeownership underscores the attractiveness of multifamily investments. As homebuyers are priced out of the market, the demand for high-quality, well-located rental units continues to grow. Multifamily properties offer not only stable cash flow but also long-term growth potential as rental demand shows no signs of slowing.
At Countrywide, we recognize this trend and provide accredited investors with access to multifamily opportunities that capitalize on the shift from homeownership to renting. Our projects are strategically positioned to meet market demand and deliver attractive returns, even in challenging economic conditions.
Why Multifamily Investments?
- Strong Demand:
Rental demand is at an all-time high as more Americans turn to renting due to affordability challenges in homeownership. - Cost Advantage:
Multifamily investments benefit from economies of scale, reducing costs and maximizing investor returns. - Market Resilience:
Multifamily properties have historically outperformed other asset classes during economic downturns, offering stability and predictable income.
As the housing market faces unprecedented challenges, multifamily properties remain a beacon of opportunity for both residents and investors. If you’re ready to explore the potential of multifamily investments, contact Countrywide today or visit our investment hub to learn more.
Sources: Wall Street Journal, CBRE Research, Freddie Mac, U.S. Census Bureau, Realtor.com®, FHFA
Disclosure:
This material is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any security or investment product. Any offers or solicitations will be made only through a confidential offering memorandum. Consult your financial, legal, and tax advisors before making any investment decisions.
