A growing number of Houstonians are putting off home purchases, choosing to rent in the hope that prices and mortgage rates will steady or decline.
Lacee Jacobs-Barnett, 33, sits with her husband, Kevin Barnett, 39, daughter Knox Barnett, 5, and son Lenox Barnett, 11 months, in their rental home on Wednesday, Jan. 11, 2023 in Houston. Lacee and her family have had a challenging time purchasing their forever home due to high interest rates. “ We want our kids to be able to make memories as they grow up in a home that’s theirs.” Said Kevin Barnett.
The short-term financial benefits of renting narrows when examining single-family home rentals. In the third quarter last year, a typical renter of a single-family home could expect to pay about $2,263 each month, according to Houston Association of Realtors. That’s almost identical to what a typical buyer could expect to pay then — about $2,250 for monthly housing payment, including principal, taxes and insurance — assuming they got a 5.
“Houston, up until a few years ago, was a little more buyer-friendly,” said Ken Johnson, economist at Florida Atlantic University. But the pandemic upended historical trends starting in mid-2020.it behooves a resident to rent in Houston, then invest the savings elsewhere. But Johnson cautions, “if you’re going to rent and then spend your savings on beer and cookies, you might as well just buy a home despite the current high prices because ownership is at least a forced savings plan.
“It doesn’t have to be your perfect, ideal home. It could be a little bit smaller, maybe the neighborhood’s not perfect, or you don’t have kids yet, so you don’t care about schools,” Tam said. “So you can kind of wait out and see what the interest rates do.” In other words, three different analyses — from ATTOM, Moody’s and the Florida universities — draw similar conclusions: Renting is more favorable to homebuying in the short-term if a resident is looking to immediately save money.For renters who can leap into homeownership, though, they could be somewhat shielded from the inflationary pressures of rising rents, assuming they could get a fixed-rate loan, said Rick Sharga, vice president at real estate data firm ATTOM.
“I have no problem with renting. People are like, ‘You’re throwing away your money.’ And I’m like, ‘Yeah but I never have to change a light bulb,’” Gonzalez said. But as she gets closer to retirement, her views on settling down are changing. Late last year, the former Houston resident returned to Texas from California to find a home she could afford to buy.
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