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This page has long supported home ownership as a proven way to build wealth and security.
Alas, for an increasing share of the population, stretching to buy a home is a perilous financial move. Far from throwing money away, renting is looking better by the day. Public officials can help by avoiding poorly conceived new rules that would only make renting more expensive.
The tilt toward renting over buying comes down to simple math. The typical interest rate on 30-year mortgages is now over 7%. The average monthly payment on a new loan is going up, up, up. American consumers who couldn't afford to buy a home when rates were in the fours will be hard-pressed to buy in the sevens today.
At the same time, home prices have continued to rise in many places, particularly the Chicago area. One of the main culprits is the shortage of homes. Plenty of builders who got burned in the 2008-09 financial crisis never made a strong comeback. Millions of homes were shelved that otherwise would have been built, had economic conditions been favorable.
The combination of higher rates and short supply discourages current homeowners from moving, especially those who are locked into mortgages at affordably low interest rates. That "lock-in effect" makes the inventory of homes even tighter, pushing prices higher still, a phenomenon that's been particularly acute in the Chicago market.
Construction costs are soaring, too. Skilled labor is hard to come by. Plus, President Donald Trump's tariffs and his war against Iran have jacked up the price of building materials like Canadian lumber as well as diesel fuel needed to deliver supplies and operate machinery.
It's not as if demand for housing is down. But when renters run the numbers, most keep on renting.
Higher mortgage rates are the most conspicuous factor putting homes out of financial reach, but not the only one. Buying a home usually requires a big down payment and expensive closing costs. Renters typically need only a security deposit and the first month's rent, so the up-front costs of renting are much lower.
Homeowners also need to keep up their homes. For most renters, landlords are responsible for all significant maintenance. So, if the refrigerator goes out, it's not the tenant's problem. Appliances, by the way, are among the products facing price increases partly attributable to tariffs.
Still, for many homeowners, building equity makes the expenses and risks worth it. Over time, most homes have appreciated dramatically. Across America, the average net worth of owners greatly exceeds the net worth of renters. No wonder homeownership remains central to the American Dream.