A saying I think of often is “the rent is too damn high.” This simple, yet effective statement is what a previous NYC mayoral candidate ran on several years back. He never did become the mayor but his statement was true nonetheless. Because here in NYC, at least, it is still too damn high. So is the cost to buy a home. 

Based on the data, you could say it feels that way in other cities too—despite mortgage interest rates rising to levels not seen since 2007 (that would logically lower home prices due to a higher cost to borrow).

Perhaps it’s because inventory has fallen with the rise in mortgage rates (since mortgage holders don’t want to sell and have to take on a more expensive mortgage). Like many things, even if demand goes down, if supply does as well, prices don’t fall.

We’ve analyzed this data to help answer the question of whether one should buy or rent now. We took national existing home sale prices, mortgage rates, and an assumption of a 20% down payment requirement, comparing this to net effective monthly rent data on a national level. Unsurprisingly, it looks more expensive to buy than rent now: 

Nothing lasts forever, so here are some considerations, for maybe when the rent (or the purchase) isn’t too damn high: 

• Last week there was a ruling that could change the way commissions work when buying or selling a home. Currently, whenever someone sells a home, typically 6% of the sale price are given to the brokers from sale proceeds on the deal for their work. The proposed change, set to take effect in July, means sellers and buyers will be able to negotiate commissions. Some believe it will lower commissions, and make home buying more affordable. But, having seen how sometimes lower fees in one place raise costs in another (credit cards, banking, etc.), I’m curious if this will actually mean hiring a broker will cost more in another way (they do less work or charge you in another way) and lower what a seller gets.

When and if the Fed does lower rates (we will learn more today at 2 PM ET), it doesn’t mean that mortgage rates will automatically go down. Looking back in history they do have a relationship but it’s been dependent on what else was happening in the economy. For example, the Fed cut rates in January 2001 and August 2007, but mortgage rates didn’t start to fall until 2002 and 2009, respectively.

In the meantime, if a home purchase is a goal, saving for it can still be a good idea. While this data is national, real estate is still very local and you never know when you’ll find something that is just right for you.