NASHVILLE, Tenn. (WTVF) — Those standing in the line of renting or buying are stuck between a rock and a hard place.
Not only is it costing an arm and a leg for an apartment, but now first-time home buyers must save up more cash to purchase a home due to higher interest rates.
"And with interest rates going up, it’s definitely limited on my purchasing power, so I’d definitely have to save up quite a bit more money now for a down payment that what I’ve already saved up," Alec Aranda said.
People like Alec are renting for longer, and this doesn't help with supply woes, according to Joel Sanders, CEO of Apartment Insiders.
"There simply is more demand, more people need places to live than there are places to live, and they’re just not keeping up," Sanders said, "So long story short is — even if there were to be a recession overall, that demand would have to really drop off."
In addition, he said people who were thinking about buying a home can usually afford a luxury apartment rental rate. On the bright side, Nashville renters could have more bargaining power in the next 18 months because more units are expected to come online.
"There’s about 32,000 apartment units in Nashville that are under development in some phase or another, and then there’s about another 30,000 that are speculative," Sanders said.
Since it costs more to borrow now, Joel worries it could impact developers too.
"Construction costs are starting to come down, and that could offset some of that as well as maybe the cost of land maybe goes down, or at least doesn’t go up as fast as it has been, that may kind of offset some of those interest rate rises," Sanders said.
As for Aranda, he might be renting longer, but that won't stop him from searching for his dream home.
"I think I would still buy if I found the right opportunity because homeownership — that’s definitely like the American Dream,” Aranda said.
Joel has some tips to help: he encourages renters to find roommates and ask their employer for a salary bump due to cost of living.
