Renting is even worse

When you pay rent, you are essentially paying for the right to live in a property without gaining any ownership stake, whereas homeowners build equity over time, which can offset the cost of ownership. Additionally, landlords typically charge enough rent to cover their mortgage payments, property taxes, maintenance costs, and insurance, plus a profit margin, making renting more expensive than a homeowner's monthly mortgage payment alone. Furthermore, rent prices can increase annually based on inflation and market conditions, while a fixed-rate mortgage payment remains the same over the life of the loan (except for changes in taxes and insurance).

But why do people consider owning a home more expensive than renting a living space? That is true from controlling establishments. From a market study from CBRE research Q1 2023, the gap in the monthly payment for a newly purchased home versus rent peaked in Q4 2022 at a 37% level, which is a $670 difference every month.

It is an easy math trick because they count it on each person, but once we convert it to $ per square foot, people are paying much more on renting. In 2023, multifamily renters are paying $2.04 per square foot per month, which is 55% more than the monthly cost of owning a home at $1.31 per square foot per month. By paying this premium, renters are essentially helping others to own and repay their financing while being left with nothing to show for it. This leads to the frustrating reality epitomized by the saying, "You will own nothing and be happy."

Source: ManageLife Research, February 2024.

Trends indicate that multifamily rent per square foot has been rising due to high capital carrying costs, increasing interest rates, and pressure from equity investors. It is also evident that multifamily rent is significantly influenced by interest rates.

To address the increasing gap, more Build-to-Rent homes with smaller unit sizes are emerging in the Sun Belt market to lower rent per square foot. However, this isn't the ultimate solution to bridge the gap and prevent establishments from profiting off renters. We need to educate everyone that paying high rent enriches others while we should strive to own our homes. Leveraging blockchain technology, we can revolutionize the housing market, fostering more efficient interactions between builders and future homeowners.