Rents Go Up in the Chesapeake Bay Area. But Still May Be Better Than Buying.

Apartments are at a nine-year low in Maryland. That’s sent rental prices up in certain areas of the Chesapeake Bay area. The state Department of Housing and Economic Development has put together an interactive map showing the most expensive — and cheapest — areas to find rental housing.

Maryland Map of Rental Housing
Map of rental housing availability & affordability (dark is least available & expensive, light is most available & cheapest). Courtesy Maryland Dept. of Housing & Economic Development.

The Baltimore Business Journal writes that average rent has increased 3.5% since 2009. Renters now spend about 33% of their income on housing. These are statewide averages.

The state finds that the biggest group of renters these days is Millennials, just over 27%. That’s up 10% for the 25-35 year old range, mainly due to younger people delaying home buying.

But that’s not necessarily a bad thing, according to Bob Carrick, personal finance columnist for the Globe and Mail newspaper. He says the new economics show that renting cheaply and putting aside savings is as good as buying a house and paying down the mortgage.

“If you’re already in the market, you’re good,” he says. “If you’re young and just starting out, you might well question the financial commitment required.”

The problem, Carrick says, is that incomes are not rising fast enough right now to keep up with housing prices, making it tough to save for a downpayment and to keep up with costs of a flexible-rate mortgage once you buy.

He breaks it down for Millennials who live in the city, but for the rest of us this will give you a good idea of the logic:

Costs to buy

Condo cost $350,000
5% downpayment $17,500

Costs to own

Monthly mortgage payment* $1,724
Estimated monthly condo fee $350
Estimated monthly property tax amount $200
Basic monthly home ownership costs $2,274

Percentage of gross income eaten by basic home ownership costs

Income Percentage to
basic costs
Feasibility
At $40,000 per year 68% No go
At $50,000 per year 55% No go
At $60,000 per year 45% No go
At $70,000 per year 39% No go
At $80,000 per year 34% Borderline

Rob Carrick is a Canadian writer, but he explains the situation very well. Click here for his full article.



 

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