Is buying or renting more viable than the other? It could go either way, according to the latest Beracha, Hardin & Johnson (BH&J) Buy vs. Rent Index from Florida Atlantic University (FAU) and Florida International University.
“With exception for parts of the Midwest, most of the ‘buy low’ deals are out of the market,” says Ken Johnson, one of the Index’s creators and an economist in the FAU College of Business. “This does not necessarily mean that it is a bad time to purchase; it simply means that potential purchasers should bargain more aggressively.”
Of the 23 separate metro areas in the BH&J Index, 11 are slightly to moderately in “buy” territory, while 10 metro areas are slightly to moderately in “rent” territory. Two cities, Dallas and Denver, remain deep in rent territory, suggesting the potential for what Johnson calls a “near-term pricing event.” This could indicate a decline in property prices, the likelihood of property transactions falling, property marketing times increasing, or a combination of all three.
“The question of another bubble continues to come up, given recent past events,” Johnson says. “However, fears of a bubble are probably overestimated, as the fundamentals underlying real estate valuation are much better today than in 2005-2007.”
Another Index creator, William G. Hardin, director of the Hollo School of Real Estate at FIU, says the market is generally stable nationally with relative indifference in the home acquisition or rental decision. This has been the case for some time and reflects positive market fundamentals.
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