Renters in Little Rock who are waiting for mortgage rates to drop before buying may be overlooking the true cost of renting, according to Jerry Larkowski, Managing Broker at ESQ. Realty Group, LLC. Larkowski, a dual-licensed attorney and broker, said that every dollar paid in rent goes to the landlord, building no equity for the tenant.
"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," Larkowski said.
In contrast, a mortgage payment splits between interest and principal, with some portion reducing the amount owed. Additionally, the property may appreciate over time. Renters, however, see no return on their monthly payments. Larkowski noted that if a landlord pays $1,100 a month on their mortgage and charges $1,500 in rent, the tenant is covering the landlord's mortgage and generating cash flow for the owner. "You're already buying a house," he said. "You're buying it for your landlord."
Many renters compare current mortgage rates in the mid-to-high sixes to the 3.5% rates some buyers secured a few years ago, leading them to wait for lower rates. Larkowski argued that this comparison misses a key point: the person who bought at 3.5% owns a home, while the renter owns nothing. He advised buying when prices are low and interest rates are high, noting that interest rates can be changed through refinancing, but the purchase price cannot.
"You can never change the price you pay for a house. You can always change the interest rate," Larkowski said. If rates fall after a purchase, the buyer can refinance to a lower payment while keeping the lower purchase price. If rates remain the same, the buyer made a reasonable decision. If rates rise, the buyer comes out ahead of those who waited.
The only scenario where waiting clearly wins is if home prices drop significantly at the same time rates fall. In Central Arkansas, where values are historically stable, that combination is unlikely.
Current market conditions in Little Rock show that inventory has been sitting longer than in previous years, indicating softer demand. This gives buyers more choices and less pressure to make quick decisions. Quality single-family homes are available at price points where a mortgage payment is competitive with what many renters are already paying. Arkansas's low property taxes help keep the total monthly cost of ownership lower than expected.
A fixed mortgage payment also remains stable over time, unlike rent, which can increase at the landlord's discretion. In ten years, a buyer who purchased in 2026 will pay the same principal and interest, while a renter will pay whatever the landlord charges.
For renters considering a purchase, Larkowski suggested the key question is whether the current monthly payment is building anything for them. More information on available properties can be found on the ESQ. Realty Group active listings page.
