Higher rates push more shoppers
toward Philadelphia area rentals

Mortgage rates are keeping more home shoppers in the rental market. As the average 30-year fixed rate neared and then passed 7% in September, rental demand in the Philadelphia metropolitan area rose 13% from a year earlier, according to Zillow. A year earlier, rates were roughly a percentage point lower. Zillow counts demand as views, shares and saves of rental listings on its site. The Philadelphia Inquirer covered the report.

Over the same year, the typical asking rent in the region rose about 3% to $1,903 a month. A buyer's typical monthly housing payment rose about 6% to $3,335. That payment covers principal, interest, property taxes and insurance, and Zillow's figure assumes a 10% down payment on a 30-year fixed loan at 6.86%, the average rate for September as a whole.

Zillow puts the household income needed to comfortably afford a typical rental here at about $76,000. Buying the typical home, valued at about $387,000, takes roughly $133,400, about $57,000 more. Nationally that gap is about $44,000, and rental demand across the country was up 19% from a year earlier.

Kara Ng, a senior economist at Zillow, described a rise in what she called the deliberate renter: someone who chooses to save and invest the difference between a buyer's payment and rent rather than buy. Zillow also notes that a growing number of households are being priced out of buying altogether.

Zillow's figures are a regional average. What it costs to buy in a given South Jersey town depends on what similar homes there have sold for and the loan terms a lender can offer.