Index Shows Housing Market Moving Deeper into Buy Territory
The latest national index produced by 抖M女仆 and FIU faculty indicates the U.S. housing market as a whole is moving marginally deeper into buy territory.
The U.S. housing market as a whole has moved marginally more in favor of home ownership over renting a comparable property and investing monthly rent savings in a portfolio of stocks and bonds. Overall, 15 of the 23 metropolitan markets investigated are trending more in favor of ownership since last quarter.
The latest national index produced by 抖M女仆 and Florida International University faculty indicates the United States housing market as a whole is moving marginally deeper into buy territory, suggesting that, on average, the majority of housing markets around the country are in good shape and remain a sound investment.
Based on numbers from the end of the second quarter, the latest comes on the heels of the latest S&P/Case-Shiller Home Price Index, which found home prices climbed nationally 5.1 percent since June 2015. Both indexes incorporate property appreciation from housing markets around the country, but unlike Case-Shiller, the BH&J Index adds additional rental, maintenance, and alternative investment data streams, among others, to indicate when and why housing markets might be changing direction.
鈥淗ousing prices, in general, continue to slow and when considered in light of the recent trends in the Buy vs. Rent Index signal that ownership remains an excellent investment for the majority of Americans,鈥 said , Ph.D., a real estate economist who is one of the index鈥檚 authors and an associate dean of graduate programs and professor in .听
The U.S. housing market as a whole has moved marginally more in favor of home ownership over renting a comparable property and investing monthly rent savings in a portfolio of stocks and bonds. Overall, 15 of the 23 metropolitan markets investigated are trending more in favor of ownership since last quarter.
Cities such as Honolulu, Kansas City, Los Angeles, Miami, Pittsburgh, Portland, San Francisco and Seattle are considered to be minimally in rent territory and show signs of slowing. The U.S. as a whole and all but three of the remaining metro areas remain in buy territory, favoring ownership as a way to create more wealth, on average.
鈥淢any of the hardest hit metropolitan areas during the real estate crash are showing signs of resilience as the cost of ownership relative to the cost of renting remains more in balance at this time,鈥 said , Ph.D., co-author of the index and assistant professor in the T&S Hollo School of Real Estate at FIU. 鈥淭hus, there are very few signs to indicate a market crash in these cities.鈥
Dallas, Denver and Houston, however, are deep into rent territory. The BH&J scores in these cities suggest that renting has roughly a 7 in 10 chance to outperform ownership.
鈥淭hese strong odds in favor of renting to create more wealth should begin to have an impact on the demand for home ownership and from that impact property prices in these areas,鈥 Beracha said.
Rents and housing pricing are rising noticeably in most parts of the country, raising the question of housing affordability.
鈥淐ontinuing near-record low mortgage rates, however, are providing a tailwind for ownership,鈥 Johnson said.听
鈥淭here does not appear to be any interest in loosening underwriting standards or offering teaser loans as a panacea to the issue of affordability this time around,鈥 Johnson said. 鈥淭hat鈥檚 another sign that we are learning how to deal with cyclical behavior in our housing markets.鈥
The BH&J Index and other 抖M女仆 real estate activities are sponsored by Investments Limited of Boca Raton. The BH&J Index is published quarterly and is available online at .听Due to data availability and the time necessary to calculate the most current index values, the index is produced two months after the end of the quarter.听
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