Mortgages Bring Record Savings Over U.S. Rents: Chart of the Day

U.S. households with home loans are benefiting from the biggest cost savings relative to rents in at least two decades, based on an analysis by Deutsche Bank AG.

The CHART OF THE DAY depicts the difference between after- tax mortgage payments and rents as a percentage of disposable income, according to data that Deutsche Bank compiled from the National Association of Realtors and the REIS Inc. information service. The chart displays fourth-quarter figures for 2002 to 2011 and annual data before then.

Mortgages cost 0.8 percentage point less in last year’s fourth quarter after being about the same as rents during the first three quarters. Home payments have been 3.1 points higher on average since 1991, analysts John Perry and Nishu Sood wrote yesterday in a report.

“Falling home prices and still-rising rents” accounted for the fourth-quarter gap, the New York-based analysts wrote. The median price of a single-family house fell 5.8 percent in the quarter, while rent payments rose 0.5 percent on average.

Rents averaged 14.9 percent more than home-loan payments during the last three months of 2011, the report said. The gap widened from the third quarter by 8.1 points, and rentals were more costly for the fifth consecutive quarter.

The differential points toward a rebound in homebuilding and a slowing of rent increases, Perry and Sood wrote. Ryland Group Inc. (RYL) and Beazer Homes USA Inc. (BZH) may benefit most among the builders. Post Properties Inc. (PPS) and Associated Estates Realty Corp. (AEC) may be hit the hardest among real-estate investment trusts that own apartments.

To contact the reporter on this story: David Wilson in New York at dwilson@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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