Are Record High Home Prices Driven by Rising Rents?

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Is renting a home starting to look like a better option than buying?  According to a recent report from Florida Atlantic University, record high home prices are being driven upward by rising rents in cities across the country.  With home prices reaching new highs, the latest Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index says that rents are rising slower than the rate of property price appreciation which they say moves areas into a more rent-friendly direction.  They say that the U.S. as a whole and 15 of 23 cities measured by the BH&J Index are in what they call buy territory implying that ownership is, on average, a better vehicle for creating wealth in these areas.  However, the remaining 8 cities are in rent territory, suggesting that renting and reinvesting in a portfolio of stocks and bonds will, on average, produce more wealth for a family.

“Increasing employment and increasing income combine with rising rents to provide a sound economic environment for the country’s housing markets, in general,” said Eli Beracha, Ph.D., co-author of the index and assistant professor in the T&S Hollo School of Real Estate at FIU.

Click here to read the full story at Florida Atlantic University.

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Director of Education & Outreach, National Real Estate Investors Association

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