US Housing Market Is Moving into ‘Buy Territory’!
So what do we mean when we say “buy territory”?
Let’s take a deep dive into buy territory.
According to the Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index, the U.S. housing market is still moving deeper into buy territory, supporting the belief that housing markets across the country remain a strong 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 for you?
The index studies the entire US housing market. Then it 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.”
As most of the metropolitan markets examined moved further into buy territory (16 of the 23), markets like Dallas, Denver, and Houston are 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 11.6%, 8.3%, and 6.6% respectively. This results in home prices in these areas returning to more normal levels. Once residents realize that renting is not the best option, it’ll result in home affordability coming back.
So the Bottom Line is…
The majority of the country is strongly in buy territory. Buying a home makes sense for you socially and financially, as rents are predicted to increase substantially in the next year. You can protect yourself from rising rents by locking in your housing cost with a mortgage payment now.
To Find Out More About the Study, click through to the link below to the BH&J Index. The BH&J Index is published quarterly and is available online at http://business.fau.edu/buyvsrent.