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Report says it's cheaper to rent than to buy a home in Austin. If you plan to buy, look out for rising interest rates

Rents and home prices have risen. Now, mortgage rates are on the way up, as well.

DALLAS — New year, new address? Data from the Texas A&M Texas Real Estate Research Center shows that in 2021, the median price of homes surged in major cities around the state:

  • Houston area: From about $260K to $305K
  • San Antonio metro: From about $255K to $305K
  • Austin area: From about $365K to $470K
  • D-FW: From about $293K to $355K

As home prices were going through the roof last year, some potential buyers decided to hold off. An end-of-year Redfin survey found about two out of five people who wanted to purchase a property decided to cancel or postpone that plan because of inflation.

So, what if you waited for this year? As we have reported before, some experts expect Texas homes to keep going up in value in 2022 but not becoming explosively more expensive like last year.

However, it is starting to cost you more to borrow. Mortgage interest rates are headed up, now at their highest point since they took that steep pandemic plunge in the spring of 2020. 

What happens next? The Mortgage Bankers Association expects that from the end of last year to the end of this year, we’ll see rates rise by about .9% overall. That matters. 

On a 30-year fixed-rate mortgage loan with 20% down, if you bought a median priced D-FW home ($355,000), a .9% rise in your interest rate (let’s say from 3.1% to 4%) would take your mortgage and principal payment from $1,213 to $1,356 — a $143 increase each month. Multiply that extra $143 per month by all the months in 30 years and you would be paying an extra $51,480 in interest over the life of the loan. 

Watch those rates because they are expected to keep rising in 2022. 

Here’s a mortgage calculator where you can run some numbers.

Many people start this new year wondering whether they should buy or rent. The average rent isn’t exactly cheap, either. In October, apartmentlist.com listed the average rent for a two-bedroom Dallas apartment at $2,320 per month.

And property data firm ATTOM Data Solutions says in a new report that it is more affordable right now to buy if you are in Harris or Bexar Counties in Texas. But they say renting is the more economical choice in Travis County. 

And they say renting is also more affordable than owning in Dallas, Tarrant, Denton, and Collin Counties in North Texas.

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