Sun. Apr 21st, 2024

BETHPAGE, Long Island (WABC) — For the first time in nearly two decades, mortgage interest rates hit 8%. That, combined with low inventory on Long Island, is locking a lot of first time homebuyers out of the market.

Compass realtor Jagmeet Bedi showed Eyewitness News reporter Chantee Lans a two-bedroom apartment in Bethpage with one bath. The asking price for monthly rent is 2,650.

That’s compared to nearly $5,000 for a monthly mortgage on a new home.

It’s just an example of high home prices and mortgage rates locking a lot of first-time homebuyers out of the market.

“We’ve had a few buyers that were frustrated because inventory is low, can’t find a property, unable to get their offer accepted so some of them have decided to go and rent,” Bedi said.

Bedi’s Long Island clients are not alone. That’s because the average monthly mortgage on a new home is 52% higher than the average rent on an apartment.

That’s according to research by the real estate firm CBRE.

The firm says mortgage and rent used to cost roughly the same.

“Prices are up, inventory is low, rates are high so yes, there is a larger gap now than we had about 3 years ago,” Bedi said.

Back during the height of the pandemic when mortgage rates dropped as low as 2 to 4%, some Long Island residents like Christian Rich cashed in.

“I have a house already. I got lucky,” said Rich who owns a home in Oyster Bay.

“I feel sorry for today’s kids, you know, you have to stay home with mom and dad to save money to buy a house, and like you said, the mortgage payments I feel sorry for them, I do,” Levittown homeowner John Franklin.

So what do you do if you want to buy in a tight housing market with mortgage interest rates now topping 8%?

“I think you need to look at the long-term benefits of purchasing,” said associate broker Yadlynd Cherubin of Keller Williams Realty.

Cherubin says although renting offers flexibility and low upfront costs, your best bet is investing and building wealth by owning.

“I think if you look at owning a property long-term, you see that the benefits of buying outweighs the benefits of renting,” Cherubin said.

Goldman Sachs predicts that home prices will continue to rise by another 3.5% by the end of next year.

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