How will the Federal Reserve’s interest rate cuts affect home prices?
The Federal Reserve’s 50 basis point interest rate cut has homebuyers and sellers wondering how it will impact the housing market. This is the first Fed rate cut since March 2020, lowering the benchmark federal funds rate to the 4.75% to 5% range. Real estate experts expect the rate cut will bring more buyers and sellers to the market, increasing inventory and creating momentum for price competition. LiveNOW’s Karel Lahara speaks with real estate expert Kirsten Jordan about the housing market.
A handful of billionaires are joining the growing list of Americans who are delaying or neglecting to buy a home.
An article published by The Wall Street Journal on Monday highlighted the alarming rise in billionaires choosing to rent rather than own homes, despite being able to purchase pricey properties.
The list also includes billionaire entrepreneur George Gooning, who argues that value does not align with price in today’s market.
“In terms of price-to-value, the supply is close to zero,” he told the outlet.
According to the Census Bureau, nearly half of renters spend more than 30% of their income on housing.
A “For Rent” sign is posted outside a home in the area of St. Clair Avenue E and Mount Pleasant Road in Toronto. (Lance McMillan/Toronto Star via Getty Images/Getty Images)
Instead, he opted to rent a high-rise apartment in Manhattan for $19,000 a month.
Bloomberg covered a similar story last year, documenting dramatic increases in property prices in certain parts of Jersey City that were owned by the wealthy when average prices were lower.
But that was in 2015.
“But an analysis of US Census Bureau data by rental marketing software company RentCafe found that five years later, 104 billionaires were renting their homes in New Jersey City. And New Jersey isn’t alone: in Washington, DC, the number of millionaire renters tripled over the same five-year period, from 41 to 121. In San Francisco, the figure increased by a staggering 1,629 percent,” the report read, adding that the overall number was still not “enormous.”
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A “Home For Sale” sign in the Capitol Hill neighborhood of Washington, DC, United States, on Tuesday, July 30, 2024. According to personal finance company Bankrate, renting is more affordable than buying a home in all 50 states. (Tierney L. Cross/Bloomberg)
The report found that the number of high-income households — those making more than $150,000 a year — doubled between 2015 and 2020.
The number continues to grow.
According to data analyzed by The Wall Street Journal, the number of renters among people making more than $750,000 a year is expected to increase by 10.5% between 2018 and 2022, while the number of renters among the top 5% of net worth individuals is expected to increase by 3.7%.
One billionaire couple who previously owned a home told CNBC they prefer renting because they can “outsource” repairs to property management companies, enjoy walkable environments, and spend less time on housework after downsizing.
But this trend is not happening everywhere.
“As an agent with 41 years of real estate experience, I haven’t seen this trend in the Houston area, but I do know some high-income earners who were living in rentals,” Cindy DePalermo, a Texas-based real estate agent, told Fox News Digital on Tuesday.
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“I think these are people who travel a lot and prefer not having to maintain a residence. And, especially in urban areas, choosing to rent allows them to be closer to luxury amenities that may be farther away or unavailable if they buy,” she added.
Renters in major U.S. cities are in a better financial position, according to a study by personal finance firm Bankrate.
“Nationwide, the typical home costs about 37% more to buy than it does to rent monthly. Rent increases have slowed across the U.S. over the past year, but a combination of soaring home prices, rising mortgage rates and low housing inventory are creating significant headwinds for potential homebuyers,” the outlet reported in April.
Asked about the rise in high-income renters, Mark Hamrick, senior economic analyst at Bankrate, told Fox News Digital: “Most truly affluent people will choose to buy a home because they don’t face the same homebuying challenges faced by those less fortunate. A smaller group would arguably argue that the flexibility that comes with renting is most appealing.”
“In the United States, homeownership is the primary route to building wealth, but those who are already wealthy may choose to put their funds elsewhere. It’s entirely true that most Americans associate homeownership with the American Dream, followed by being able to retire and having a successful career, according to Bankrate research. The wealthy are in the luxurious position of looking at these options from a different perspective.”
For more details, visit FOX Business.
