According to the Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index, the U.S.
housing market has continued to move deeper into buy territory, supporting the belief that housing markets across
the country remain a sound investment.
The BH&J Index is a quarterly report that attempts to answer the question:
In today’s housing market, is it better to rent or buy a home?
The index examines the entire US housing market and then isolates 23 major cities for comparison. The
researchers “measure the relationship between purchasing property and building wealth through a buildup in
equity versus renting a comparable property and investing in a portfolio of stocks and bonds.”
While most of the metropolitan markets examined moved further into buy territory (15 of the 23), markets like
Dallas, Denver, and Houston are currently deep into rent territory. In these three markets, it is estimated that
renting will top homeownership 7 out of 10 times.
Due to a lack of inventory, the home prices in the Dallas, Denver, and Houston, areas have increased by 13%, 11.4%, and 7.3% respectively. Home prices in these areas will begin to return to more
normal levels once residents realize that renting is not the best option, therefore bringing home affordability back
as well.
Bottom Line
The majority of the country is strongly in buy territory. Buying a home makes sense socially and financially, as
rents are predicted to increase substantially in the next year. Protect yourself from rising
rents by locking in your housing cost with a mortgage payment
now.
To Find Out More About the Study: The BH&J Index and other FAU real estate activities are
sponsored by Investments Limited of Boca Raton. The BH&J Index is published quarterly and is available online
at http://business.fau.edu/buyvsrent.
Traditionally, rx spring
is the busiest season for real estate. Buyers come out in force and homeowners list their houses for sale hoping to
capitalize on buyer activity. This year will be no different!
Buyers have already been out in force looking for their dream homes and more are on their way, but the challenge is
that the inventory of homes for sale has not kept up with demand, which has lead to A LOT of competition for the
homes that are available.
A recent Bloomberg article touched on the current
market conditions:
“It’s the 2017 U.S. spring home-selling season, and listings are scarcer than they’ve ever been. Bidding wars
common in perennially hot markets like the San Francisco Bay area, Denver and Boston are now also prevalent in
the once slow-and-steady heartland, sending prices higher and sparking desperation among buyers across the
country.”
Sam Khater, Deputy Chief Economist at CoreLogic went
on to explain why buyers are flocking to the market in big numbers:
“In today’s market, many buyers think the trough in [interest] rates is over. If you don’t get in now, it’s
just going to be worse later. Rates will be higher, prices will be higher, and maybe inventory selection will be
lower.”
In some markets, “thirty-five percent of properties are selling
within the first week or two of hitting the market.” Homes
are selling at a rapid clip in places like:
- Denver, CO
- Seattle, WA
- Oakland, CA
- Grand Rapids, MI
- Boise, ID
- Madison, WI
- Omaha, NE
Bottom Line
Let’s get together to discuss your exact market conditions and help you create a strategy to secure your new home
in this competitive atmosphere!