Last spring, Rosaline Tio and Dave Hung felt it was the right moment to relocate. The couple, in their late 30s, had owned a townhouse in Atlanta since 2017, but Dave was finding his commute lengthy, and with two young children—a four-year-old and a toddler—the house was becoming too small.

Searching for a new home proved challenging. “The neighborhood we liked best was at the upper limit of our budget,” Tio shared. “Good houses were snatched up quickly.”

High property prices weren’t their only dilemma. “The high mortgage rates were a significant concern,” Tio mentioned. The interest rate they’d face for a new mortgage in 2024 would be over twice the rate on their current townhouse mortgage. “It feels like just a sign of the times. You have to adapt,” she reflected, though it was an uneasy feeling.

Ultimately, they found an unconventional solution that worked for them. They rented a home in their desired area and became landlords by leasing out their townhouse. This choice saved them almost $2,000 per month compared to the homes they were considering buying.

“We’re in a new neighborhood, and it makes sense to get a feel for it before making a purchase,” Tio stated. “Financially, it felt much more manageable than overextending ourselves to buy something above our means.”

The Stubbornness of Housing Inflation

While inflation is generally decreasing, the housing sector remains an exception.

According to the Labor Department, among all consumer price index components, housing costs saw one of the most significant increases in September, rising 4.9% year-over-year.

As of August, the average mortgage payment for existing homeowners reached a record $2,070, marking a 7.2% increase from the previous year, according to data from ICE.

“Even with rising incomes, making an average mortgage payment now consumes about 30.7% of the median monthly U.S. household income, the highest percentage since June 2015,” the ICE report detailed. For current house hunters, acquiring the average-priced home as of mid-September would require a monthly payment of $2,215, equating to 32.9% of median income, compared to an average of around 25% over the last 40 years.

Challenges of Homeownership

Tio and Hung were fortunate: their 2017 home purchase will appreciate in value, helping them build equity. However, high prices in the housing market are preventing many Americans from entering the market.

Nicholas Martin, the owner of Buyer’s Choice Realty in north Massachusetts, describes the market as “stagnant.” He believes many people are waiting for the right moment and foresees that new listings will only pick up once mortgage rates fall into the 5% range.

As of mid-summer, 84.2% of homeowners are locked into rates below 6%, and 74.6% below 5%, according to Redfin’s analysis. As of early October, the average 30-year fixed-rate mortgage stood at 6.12%, according to Freddie Mac.

“We feel content with our situation for the time being,” Tio expressed. “It’s been a realization for us: growing up, homeownership was seen as the ultimate goal, but why do we have to think that way? We’re perfectly happy renting as long as the owners are fine with it. It gives us ample space—much more than we could afford to buy—and allows our boys plenty of room to grow. It really meets all our needs.”