Rising rents are forcing renters to outspend home owners on housing costs, according to a new study.
Since 2005, home owners’ housing expenses have climbed from 31.9 percent of their household budget to 33.2 percent. On the other hand, in that same time period, renters’ expenses have jumped from 35.6 percent to 38.4 percent, according to the October CoreLogic U.S. Housing and Mortgage Trends....
Earlier this month, Capital Economics economists noted that for the first time in 30 years the median monthly mortgage payment is about the same -- or less -- than the median rental payment...
Source: RISMedia (Oct. 25, 2011)
Jay's Notes: Because interest rates and prices are so low, it is not uncommon for us to see mortagage payments of only $350/mo. for investors. This has created a huge spread between the cost of owning the home and renting. This spread is what is creating the huge cash flows that we see right now. The market will find its balance again, but for now it is an investors's dream.