Jerry Larkowski, Managing Broker at ESQ. Realty Group, LLC in Little Rock, contends that many renters waiting for lower mortgage rates are overlooking the financial cost of their decision. “When you rent, you’re basically paying 100 percent interest every month. You are building up no equity. You are not paying down any principal,” he said.
Every dollar of rent goes to the landlord, whereas a mortgage payment splits between interest and principal, with some of each payment reducing what is owed. The home may also appreciate in value over time, further benefiting the buyer. Larkowski notes that if a landlord pays $1,100 a month on their mortgage and charges $1,500 in rent, the tenant is covering that note and generating cash flow for the owner. “You’re already buying a house,” he says. “You’re buying it for your landlord.”
The common comparison renters make is between current mortgage rates and the low rates of a few years ago. Current rates in the mid-to-high sixes feel like a reason to wait, but that overlooks the fact that the person who bought at 3.5% also bought a house, while the person waiting owns nothing. Larkowski advises buying when prices are low and interest rates are high. “You can never change the price you pay for a house. You can always change the interest rate,” he said. If rates fall, refinancing lowers the payment; if rates rise, the buyer who acted early benefits.
In the Little Rock market, inventory has been sitting longer, giving buyers more choices and less pressure. Quality single-family homes remain available at price points where a mortgage payment is competitive with rent. Arkansas has some of the lowest property taxes in the country, keeping the total monthly cost of ownership lower than expected. Additionally, a fixed mortgage payment remains the same over time, while rent can increase at the landlord's discretion.
For those considering buying, the key question is whether the current monthly payment builds anything for them. More information on available properties is on the ESQ. Realty Group active listings page. ESQ. Realty Group, LLC is a full-service real estate brokerage serving Little Rock and Hot Springs, Arkansas, led by Jerry Larkowski, a dual-licensed attorney and broker. Learn more at esqbrokers.com.
