The Rent-Buy Disconnect That’s Freezing the Housing Market

Written by:

Steve Marcinuk

Date:

24 Dec 2025

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The residential real estate market is stuck in a prolonged period of imbalance, as the gap between rental and ownership costs prevents the usual price correction, according to Matt Mobley, broker and owner of Hancock Realty Group in Clermont, Florida. Mobley argues that this disconnect is keeping home values from adjusting downward at the pace that market fundamentals would suggest.

Mobley’s local market, which he says mirrors conditions in many U.S. suburbs, highlights the problem. “A typical three-bedroom, two-bath in my town is going to cost you between $2,400 to $2,500 to rent it,” Mobley says. “And it’s going to cost you $3,200 to own it. It doesn’t work.” In most markets, such a gap would pressure home prices to fall until monthly mortgage payments more closely align with rents, but Mobley points out that this is not occurring.

The Rent Escalation Dynamic

Mobley explains that the ongoing payment gap is allowing rents to rise instead of forcing home prices down. “When our payments came up to here, the rent was down here,” he says, referencing the initial divergence when interest rates increased, and mortgage payments jumped. “That has allowed rent to move up to it, this big space between owning and buying.”

As a result, landlords have been able to raise rents even as home sales have slowed. “The fact that our values haven’t dropped very quickly, they just kind of creep down,” Mobley says. “That’s allowed landlords to raise the rent because that gap is still there. So rent has come up in a time when sales have been slow.”

This pattern leads to gradual price declines rather than a sharp correction. “We dropped 10% immediately, but we regained about 7%, and then we’ll drop again, and we’ll regain in the spring,” Mobley says, describing a cycle of slight declines and partial recoveries that has played out in his market over the past three years.

The Mortgage Lock Effect

In addition to the rent escalation, Mobley points to another factor constraining the market: the so-called “mortgage lock effect.” Homeowners with low-rate mortgages are reluctant to sell, knowing that buying another home would mean much higher monthly payments. “If you don’t have a mortgage, then you sell your home for a little less now, but the one you’re going to buy is less now as well,” Mobley says. “So it’s working out for you. It’s the mortgage takers who do not want to move.”

This dynamic is keeping inventory levels lower than they would otherwise be. “That’s keeping our inventories a little tighter because the only people putting their home up for sale really have to for whatever reason,” he says. The result is a market where most transactions are driven by necessity—job relocations, significant life changes, or cash buyers who are not affected by mortgage rates. “The transactions we have are the transactions that have to be done,” Mobley says. “No one wants to sell their home right now if they have a mortgage.”

When Does Equilibrium Return?

Mobley believes the market will remain out of balance until the gap between rent and ownership costs closes. “Until we find equilibrium between mortgage payments and rent payments, we’re not there,” he says. That equilibrium could be reached either by home prices falling enough to match rental costs or by rents rising further to close the gap from the other direction.

Mobley sees rents as more likely to rise than home prices to fall. “Rent’s going to go up again, because that gap allows for it,” he says, arguing that the current environment creates upward pressure on rents rather than downward pressure on home prices.

Broader Market Implications

If Mobley’s observations are representative of trends elsewhere, the implications could be significant for buyers and sellers across the country. The traditional expectation that home prices will fall sharply to restore affordability may not hold if rising rents continue to erode the affordability advantage of homeownership.

For buyers waiting for lower prices, Mobley’s analysis suggests the market may reach equilibrium not through falling home values, but through rising rents that make ownership comparatively more attractive. For sellers, the adjustment may be slow and incremental, with values declining gradually rather than dropping quickly.

Whether this slow-motion correction is a lasting change in how housing markets operate, or a temporary response to the post-pandemic surge in interest rates and limited inventory, remains uncertain. What is clear in Mobley’s view is that the gap between rent and ownership costs is now the central factor shaping the path of the housing market’s recovery.