By coinnews 
00:00 Speaker A
Realtor.com’s April renter report found that rents once again fell in the past month, with the median asking rents falling just under 2% month-over-month. Joining me now in studio to break down the latest housing data, we’ve got Danielle Hale, who is the retail or realtor.com chief economist here. Danielle, great to have you here IRL in studio with us. How are things for renters in the US right now?
00:40 Danielle Hale
So there are some bright spots. So rents are easing a bit nationwide and in some cases, in some markets more than in other areas. And so that is a improving rental affordability. Um, but it really depends on what comparison point we’re talking about. So we’re looking year over year, month over month, uh, rents have eased a little bit, but if we go back to before the pandemic, for example, rents are still up nationwide. So it really is about the perspective shift. It also depends on how we’re measuring rents. So realtor.com data, we’re measuring asking rents for places that are advertised on realtor.com. The CPI report was out yesterday, you know, it showed that shelter inflation is still going up because it’s looking at the rents that all renters pay, not just the rents on properties that are advertised for rent right now.
01:57 Speaker A
And so as we think about whether it’s better to be an owner of real estate or a renter of real estate right now, what is the the ultimate answer at this juncture based on the figures?
02:18 Danielle Hale
Yeah, so I think in the long run, for a lot of people owning a home makes sense. It’s a good way to accumulate wealth. Um, you know, in the past couple years, you might have seen people get rich quick. That’s not the norm. It’s usually a way to build wealth gradually over time. But if you look at the costs of buying versus renting today, in many markets, renting is going to be the better short-run financial decision, and you really have to be committed to the long run for owning to make sense.
03:02 Speaker A
You mentioned CPI print that we that we broke down for our viewers yesterday as well here, and remembering that shelter rose 3/10th of a percent in April, accounting for more than half of the all items monthly increase here. What gauges or or what are the key kind of like takeaways from that report, as well as what levers the Fed can actually pull to help, which is a very sticky component of inflation as they’re continuing to track?
03:47 Danielle Hale
Yeah, so in shelter inflation, it has a long lag. So we’ve been tracking, you know, asking rents and those have been declining for quite some time now, but we’re not necessarily seeing that in shelter inflation because it’s still in many ways playing catch-up. So, you know, not um, not every renter is going to move every year. We see that people who stay put tend to have smaller rent increases than for a vacant unit, for example. So in many respects, the market is still playing catch-up. You know, the Fed and their most recent meeting left rates unchanged, kind of in wait and see mode. Employment still looks good. Inflation is improving very, very slowly, but still on the right track, kind of close to the 2% target. Um, so that gives them some time to wait and see, but there’s a lot of uncertainty in the general macro environment ahead.
05:00 Speaker A
For those right now who are going out, they’re house hunting, and they’re trying to figure out where they can kind of find a sweet spot, especially given some of the affordability issues that we’ve continued to track. How can they kind of work through that calculus of where affordability is is possible versus where they might need to continue to rent in the near term?
05:32 Danielle Hale
So affordability for buying, we’re seeing lower prices in parts of the Northeast, sort of secondary markets, and in the Midwest. In parts of the South, we’re seeing prices come down a little bit, so that can be an area of opportunity. And the good news for potential buyers is that just about everywhere, we’re seeing more homes on the market. So they do have more choices and in some cases even a little more bargaining power when they’re dealing with sellers. Um, but, you know, prices still are high, mortgage rates still are high. Uh, you know, an opportunity to think about if you’re in a market that has more building is new construction because builders have been willing to buy down mortgage rates, which can make a difference for some people between being able to afford the payment and and not necessarily.
06:44 Speaker A
So what should we expect of the spring into summer season for home buying and on the home ownership front?
06:55 Danielle Hale
Now, so mortgage rates have been a little bit stubborn lately. We’re still up close to six and three quarters of a percent. Um, that’s not a rate at which we see housing activity really pick up. I think we need to see mortgage rates come back to the low six percent range before we see a little bit more activity. So I think it’s going to be a little bit more slow and steady. The market is rebalancing, giving a little more negotiating power to buyers, and that means sellers who are still continuing to get into the housing market need to be mindful and price their homes appropriately.
07:44 Speaker A
Longtime friend of the show, Danielle, great to have you here in studio with us. Appreciate it.
07:50 Danielle Hale
Thanks for having me.
07:51 Speaker A
Certainly.