Because that's how it normally works? Why would any renter pay that much? If they have that much disposable income each month, they could just buy instead of renting.
You aren't aware that plenty of people rent houses?
By renting instead of buying, you don't incur any of the costs or headaches associated with with home ownership or repair. There are also plenty of people who are only living in one place for a limited period of time, and additionally, plenty of corporations will rent out homes in decent locations if their employees need to be there for extended projects.
I am aware; I was a renter until a couple of years ago. I have rented houses in the East Bay (Alameda, CA) and Seattle, and in each case, my rent was 70%-80% of what the monthly payment on a 30 year mortgage on the same house would have been. The same was true of apartments I rented in Manhattan.
Maybe it doesn't work that way in other markets, but you'd have to be nuts as a renter to pay enough to cover your landlord's mortgage.
Let me assure you then, that in most markets, you will pay far more than the cost of a 30 year mortgage plus taxes and insurance for renting a house. You're subsidizing the cost of vacancies and also paying for some of the maintenance.
A 3 bedroom, 2 bath home in a decent but inexpensive part of the DFW where I live will run you $2K per month. These prices will skyrocket as rental prices catch up to the mortgage market. But just for comparison, 2 years ago that same house would have been on the market for about $220K and would have had a monthly mortgage of about $1200 a month on a 15 year loan or $800 or so on a 30 year loan.
In my neighborhood now, people rent for considerably more than they would pay per month if they bought here. They want to live here but nothing is for sale. It’s large single family homes. Renters tend to be people who have frequent job transfers and people who are having custom homes built nearby.
Also I’ve never rented anything for less than what I could own something comparable. Maybe you can in some markets. But generally I expect to pay more monthly. It’s a trade off for avoiding everything that comes with home ownership. Down payments, maintenance, and the overall commitment. It’s hard to just pick up and move when you have to go through the process of selling, making contingent offers on another place, multiple closings, all that.
I have been a renter in NYC, Seattle, and the Bay Area; every single time, I looked up how much the property last sold for and calculated how much a mortgage on it would cost me per month. My rent was normally 70%-80% of the expected payment on a 30 year mortgage.
I was never paying below-market-rate rent, either! Maybe it doesn't work out this way if you're renting in an area with lower average property values?
