Home prices and rents are soaring in many markets across the country, according to the latest national index reading by Florida Atlantic University and Florida International University
Read more: Housing Markets Move More Into Buy Zone
“With both significant increases in rents and property prices, the issue of housing affordability is quickly becoming a major concern again across many areas of the country,” says Ken Johnson, a real estate economist and one of the index’s authors. “Given the country’s experience during the run-up to the housing crash in 2008, it’s doubtful that we will again respond to the housing affordability issue with easy and flexible access to credit.”
The Beracha, Hardin & Johnson Buy vs. Rent Index, based on data from the end of the third quarter, shows that rents across all 23 major cities that were measured are rising slower than the rate of property price appreciation. As such, more areas are moving – albeit marginally – in the direction of being more rent friendly, the index shows.
Over the last three years, the rate of rent increases have nearly matched the rate of property price increases, which the index authors say supports the conclusion that property prices are being supported by rent increases.
“Increasing employment and increasing income combine with rising rents to provide a sound economic environment for the country’s housing markets, in general,” says Eli Beracha, co-author of the index and assistant professor in the T&S Hollo School of Real Estate at FIU.
Fifteen of the 23 cities measured in the index are in the “buy” territory, which means ownership is a better vehicle for creating wealth. Those 15 cities are:
- Atlanta
- Boston
- Chicago
- Cincinnati
- Cleveland
- Detroit
- Honolulu
- Kansas City
- Los Angeles
- Milwaukee
- Minneapolis
- New York
- Philadelphia
- San Diego
- St. Louis, Mo.
Source: Florida Atlantic University
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