The rent vs. buy debate in the current housing market

After renting throughout my 20s, my thoughts have turned increasingly to homeownership as I begin my 30s. Or at least they did, before the recent spate of rate hikes sent the cost of a mortgage up correspondingly. The average rate of a 30-year fixed mortgage is 7 percent right now, compared to less than 3 percent in early 2021. .That makes the loan itself more expensive, but it also has a chilling effect on the available stock of homes. Who can blame a homeowner with a mortgage at 3 percent who doesn't want to move in the current environment? Couple those high rates with the relative scarcity of more affordable starter homes, and the housing market is pretty bleak for potential first-time homeowners like myself. .Making matters worse is the persistent shortage of adequate new construction. At an economic forecast webinar we hosted earlier this year, the presenter spoke about the gap between the housing we need and the housing we're building. There's been a gap of 2 million homes in the market since 2008, according to Eric Kelley, chief investment officer at UMB Bank in Kansas City. That gap isn't shrinking at current rates of construction compared to the number of new households the country has been adding..The traditional wisdom around renting vs. homeownership is clear: Stop flushing money down the drain (your landlord's pockets) and put it toward something that you own, a source of stability and investment in your future. But is that still the case in today's environment? .The rental market has its own problems, of course, with rates there decreasing less than expected from last year's peak. But when you include all the costs of homeownership in addition to high mortgage rates, it's made the problem of rent vs. buy trickier to solve. Our look at the logistics of banking homeowners associations provides a bit of a preview of some of the issues facing homeowners in addition to the benefits banks can gain from those relationships..It's put me and many of my peers looking to settle down in a bit of a bind. As a single person, my choice at the moment is fairly easy and painless: Stick out the current conditions until buying becomes more affordable again (hopefully). For those starting families or empty nesters looking to downsize, the question is a great deal more fraught..While there's not really anything we can do to affect the FOMC's decision to raise, hold or lower rates, I've been intrigued by one possible solution to this problem. It's not a silver bullet, but some municipalities are changing zoning laws to ease construction of townhomes, accessory dwelling units or other less traditional housing. I'll keep my eye on the results.