Summary
From 2020 to 2021, home values nationwide rose 17 percent on average. Prices have risen by around an additional 5 percent every year since. Mortgage interest rates were at historic lows.
The U.S. is in the midst of a major housing shortage. The U.K. is also in the middle of a housing crisis.
The U.S. Federal Reserve set an overnight rate of 5.25 to 5.5 percent. The rate is a 16-year high.
Price-to-rent ratio (P/R ratio) is home price divided by annual rent. The higher the P/R, the more attractive the option of renting.
If you’re renting in a neighborhood with these types of numbers, remain a renter in that location. In Manhattan, for example, every $1,000 of rent gets you more than $600,000 worth of home.
This is the Invest Anywhere philosophy, which I’ve discussed on the podcast. Buy rental property out-of-state.
High interest rates might push you towards a lower-priced home initially. Once you refinance to a lower rate, your monthly payment can decrease significantly.
