Perhaps you have heard the “Rent–vs-Buy” argument far too often. Many who have come to that fork in the buy-rent “yellow-brick road,” develop “analysis paralysis” and continue residing in the ever-increasing, pricey rental market even though the experts still indicate that the road to wealth is homeownership.
According to the latest Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index homeownership is a better way to produce greater wealth, on average, than renting.
The BH&J Index is a quarterly report that attempts to answer the question:
Is it better to rent or buy a home in today’s housing market?
The index examines that entire US housing market and then isolates 23 major markets for comparison. Using a “horse-race comparison,” the researchers compare an individual who may rent a similar quality home to another who invests those same monies in a purchase.
Ken Johnson, Real Estate Economist & Professor at Florida Atlantic University, and one of the index’s authors states:
“The U.S. as a whole is still in clear buy territory. The cities of Cincinnati, Chicago, Cleveland, and New York City are deep into buy territory.”
Miami [area] and Portland had been inching closer toward renting being the better option but have “pulled back from the edge.” Johnson goes on to say, “that’s a good sign for home pricing as it suggests prices are going to level off in these metro areas.”
What is going on with pricing in Davie and Cooper City?
In school we all learned the Theory of Supply and Demand. When the demand for an item is greater than the supply of that item, the price will surely rise.
Single-family homes for sale (inventory) in Davie are down 3.6% compared to last year. Single-family homes sold and closed are up 45.5% compared to last year as well as homes currently placed under contract are up 45.2%. This results in a three-months’ supply of single-family homes available, making this a bona fide Seller’s market.
Single-family homes for sale (inventory) in Cooper City are actually up 17.3% compared to last year. However, single-family homes closed are up 52.4% compared to last year as well as homes currently placed under contract are up 84.6% compared to last year. Again, this a bona fide Seller’s market. The 17.3% increase in inventory over last year does make up for the giant leap of homes under contract and homes that have sold and closed.
What about homes for rent?
In Davie, there is only one-month’s supply.
In Cooper City, there is only .9 month’s supply of inventory.
The low inventory of single-family rentals will drive up the price.
What about financing?
If you are a first-time buyer or a current homeowner thinking of moving up to a bigger home or buying a vacation home, now may be the time to act. Mortgage lending standards are beginning to ease and interest rates are beginning to inch up.