The U.S. housing market is moving deeper into “buy territory,” which indicates that the majority of housing markets remain a sound investment, according to a newly released national index by Florida Atlantic University and Florida International University.
“Housing 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,” says Ken Johnson, a real estate economist and an author of the index, the Beracha, Hardin & Johnson Buy vs. Rent Index.
The index shows that owning a home trumps renting a comparable property as well as investing rent savings in a portfolio of stocks and bonds.
Fifteen of the 23 metro markets tracked in the index favored ownership over renting.
“Many 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,” says Eli Beracha, co-author of the index and an assistant professor of real estate at Florida International University.
Rents and home prices are rising across the country, which could impact housing affordability.
“Continuing near-record low mortgage rates, however, are providing a tailwind for ownership,” Johnson says. “There 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. That’s another sign that we are learning how to deal with cyclical behavior in our housing markets.”
References: RealtorMag, Florida Atlantic University