Recent US housing market data has shown that rising mortgage rates and housing prices have largely prevented renters from entering the market, causing home ownership rates to stagnate.

According to a recent CNBC article, Wages haven’t come close to keeping pace with housing costs: between 2001 and 2011, median rental housing costs rose 5 percent, while median renter incomes actually dropped 15 percent. While the number of cost-burdened renters nationwide receded from a high mark of 21.3 million in 2014 to 20.8 million in 2016, it’s still higher than it’s been for years. 

In addition to a broadening gap between wages and home valuations, the debt incurred by younger generations has likewise prevented would-be first-time buyers from saving enough money for a down payment, contributing to a rising rental market.

Costs of home repair and upkeep have frightened these renters further that if they did enter the homeowner’s market, their accounts would quickly be depleted, causing them to recede further into the safety of their landlord’s fiduciary responsibilities.

Despite these indicators that there is little hope for a change of tide in the near future, homeownership remains a far better long-term wealth builder than renting in most cities across the U.S.

Being able to convey this concept to first-time home buyers is a necessary skill for realtors to possess if they hope to gain new lasting clientele relationships.

To express the advantage of building equity in a home, it’s imperative that a realtor attempting to convert a renter into a lead hit on the following talking points:

1. Equity built in a home more than offsets the cost of a down payment, upkeep, and repairs over time.

With each monthly payment the homeowner is paying off the principal and gaining equity in the home.

The true cost of monthly mortgage payments is the interest paid that month. While these payments can become costly depending on the rates when the buyer purchased the home, they are almost always significantly lower than local rent rates.

Upkeep and repair can hit a homeowner’s personal bank account hard, but remind them that these repairs or renovations contribute to the value of the home, meaning the equity gained yields a greater financial return than mortgage payments made before the repairs.

On average, home values increase by 5.4% per year. So just by buying the home, the owner gains 5.4% of the price of the home when they bought it every year in terms of acquired wealth.

2. Rental markets rise in an inversely proportional manner to housing demand.

This means a lasting rising rental market, like the one currently underway, will eventually result in a cooling off of the housing market, so homes will soon become more affordable, making this a good time to begin looking to get a head start on the impending buyer influx.

3.There has been a steady rise of roommates and shared housing in recent years.

Renting out rooms in your new home can soften mortgage payments and allow new home owners to build equity while simultaneously spending less than they would be renting.

Several apps are available for free download that facilitate this process and allow homeowners to vet prospects beforehand.

4. Some avoidance to entering the housing market could be a product of ignorance of mortgage loans.

Make sure they understand what mortgage insurance is, and if they qualify for any benefits that could lessen their monthly payments.

If this is right for them based on their financial standing, this could help convince potential buyers saving enough money for a full 20% down payment isn’t necessary before entering the housing market.

Explain to them the differences between VA loans, FHA loans, and USDA loans, then walk them through the process of determining if they qualify.


In this rising rental market, realtors increasingly are hearing from cold leads, “I can’t afford to buy a home right now.” While this is true for many of those leads, some are just uninformed of the benefits of homeownership, what it means to build equity in a home, how appreciation raises their net worth, or how mortgage loans function. Realtors can and should arm themselves with the above information to help these potential homeowners decide if they really can afford a home right now, and if that is the better option for them.