Cost of buying homes in Utah far outpaces price of renting

Cost of buying homes in Utah far outpaces price of renting

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There’s no question, buyers today – compared to even just a few days ago – are saving hundreds of dollars a month in their housing payments as mortgage rates fall.

However, the financial gulf between buying and renting is wide, and it’s keeping many on the sidelines.

Matt Carlisle recently bought a home in Utah County.

“It’s really nice. We’re really excited to have a place that we can call home,” he said.

Carlisle bought a townhome thanks to a boost from the state’s first-time homebuyer program, but he said it still wasn’t easy.

“It was really tough,” Carlisle said. “We were worried that we would ever be able to afford a house.”

That’s a concern for many Utahns. According to the Kem C. Gardner Policy Institute, in October the monthly cost to rent a typical single-family home was just over $2,000.

But to buy it? The monthly mortgage cost jumped to over $3,500 per month.

MORE on Utah’s Growing Pains:

“There’s still a historical gap between renting a single-family home and purchasing a single-family home in terms of monthly costs,” housing analyst Dejan Eskic said.

However, mortgage rates have fallen recently, shaving off some of that amount. Eskic said homeowners who have low rates could be more inclined to sell.

“This could potentially have a positive impact on supply and it’ll bring more for-sale housing to the market that we’ve not seen the last couple years,” he said.

Mortgage lender Rick Anderton said he’s already seeing more business as rates drop.

“It has been an uptick, even though this is the slowest time of year,” said Anderton. “We are seeing more people apply and start looking for homes.”

The Mortgage Bankers Association reported recently that mortgage applications increased 7.4 percent week over week. That was even before the Federal Reserve indicated it would cut interest rates several times next year, leading to market optimism and a noticeable drop in mortgage rates.

As for Carlisle, his mortgage is higher than he’d like. He hopes to refinance soon. But he said he’s glad to be where he is.

“I work with a lot of people who struggle to even find a place to rent,” he said, “and I feel very lucky and happy to be in this position.”

Besides mortgage rates, housing prices have also made it difficult for many to get into the market. Prices have stayed stubbornly high.

Eskic, the housing analyst, estimates nine out of ten Utahns who currently rent cannot afford the median-priced home.

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