This Week’s Takeaways:
- Three updated economic models show that homebuyers may need to adjust to mortgage rates that remain meaningfully above pandemic-era lows, as a quick return to sub-5% rates appears unlikely without a material shift in the economy.
- Whether renting or buying makes more sense depends on local housing costs, mortgage rates, and how long you plan to stay, and this week’s list breaks down the key factors along with where each option currently has the advantage nationally.
- Rather than accepting lower offers, more homeowners are pulling listings from the market, reducing sales activity and helping prevent a larger decline in home prices.
- Building wealth is only half the challenge—retirement requires a strategy for turning savings into sustainable income that can last for decades.
- Families considering Trump Accounts should understand that the important question of whether contributions require a gift tax return remains unanswered, and that uncertainty may influence how these accounts fit into a broader wealth transfer and education funding strategy.
- Plus, my latest book recommendation and this week’s Boston Corner provides a detailed look at the regional economy.
Mortgage rates are unlikely to return to the sub-5% levels seen during the pandemic era anytime soon, as higher inflation, larger government deficits, and a structurally higher interest rate environment continue to put upward pressure on borrowing costs. As a result, homebuyers waiting for dramatically lower rates may be disappointed and could face a housing market where affordability improves only gradually rather than through a sharp decline in financing costs.
Rent or buy? How long it takes for buying a home to pay off in each metro by Zillow
The rent-versus-buy decision depends mainly on where you live, how long you expect to stay, home prices, rents, mortgage rates, taxes, insurance, maintenance, closing costs, and the opportunity cost of tying up cash in a down payment. Nationally, buying breaks even versus renting after about six years, down from 8.4 years in 2023, with the typical U.S. home around $368,720 and typical rent around $1,951 per month. The breakeven period is much shorter in markets such as Columbus, Memphis, and Buffalo, but in San Francisco, San Jose, and New Orleans, renting remains ahead even over a 30-year horizon.
See also: Sellers are pulling homes off the market at the fastest pace since 2020 by CNBC
More homeowners are pulling their properties off the market after failing to receive the price they want, reflecting a growing disconnect between seller expectations and what buyers can afford in a higher-rate environment. Rather than accepting lower offers, many sellers are choosing to wait, relist later, or keep their homes, which reduces the effective supply of homes available for sale. This dynamic helps explain why housing activity has slowed significantly while home prices have remained more resilient than many expected.
How to turn retirement savings into reliable income by Vanguard
Retirement planning is about more than building wealth—it requires converting savings into a reliable income stream that can support spending for decades. The key decisions include determining a sustainable withdrawal rate, coordinating guaranteed income sources such as Social Security and pensions, and balancing current spending needs against the risk of running out of money later in life. The article provides a practical framework for turning a retirement portfolio into a paycheck while managing longevity, inflation, and market risk.
The Trump Account Gift Tax Question Nobody Has Answered Yet by Savant Wealth
My long-time colleague, Ed Jastrem, wrote this piece for Savant clients addressing an unanswered question about whether the Trump accounts require filing a gift tax return. For now, families considering Trump Accounts should understand that an important question remains unanswered, and that uncertainty may influence how these accounts fit into a broader wealth transfer and education funding strategy.
Book Recommendation
Rasputin: The Downfall of the Romanovs by Antony Beevor
From one of our most acclaimed historians, a major new biography of one of history’s most disturbing, dubious masterminds, showing how a Siberian peasant, through his seduction of the imperial household, contributed to the collapse of the greatest autocracy in the world
Boston Corner
The Beige Book – First District by Federal Reserve Bank of Boston
Economic activity in New England rebounded modestly, with improvements in consumer spending, auto sales, manufacturing, and business services following a softer prior period. Higher gas and energy prices emerged as a key concern, putting pressure on household budgets and increasing costs for businesses across multiple industries. The labor market remained stable, with limited hiring, modest wage growth, and signs that demand is shifting toward more experienced workers. Housing activity softened, but limited inventory continued to support home prices even as affordability challenges persisted.
