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HOW AMERICANS
FEEL ABOUT
HOMEOWNERSHIP
e discrepancy between homeownership
costs and renting costs are increasing
across the United States, according to
the latest national index by professors at
Florida Atlantic and Florida International
universities. at gap is widening most in
parts of the Southeast, Midwest, and Pacific
Northwest.
e Beracha, Hardin & Johnson Buy vs.
Rent Index "determines whether consumers
will create wealth faster in buying a home
and building equity or renting the same
property and reinvesting the money they
would have spent on ownership, such as
taxes, insurance, and maintenance." e index
takes into account the full U.S. housing
market but narrows its focus by targeting 23
key metropolitan areas, "factoring in home
prices, rents, mortgage rates, investment
returns, property taxes, insurance and home
maintenance costs."
e quarterly numbers show that Atlanta,
Dallas, Denver, Houston, Kansas City,
Miami, Pittsburgh, San Francisco, Seattle and
Portland, Oregon, are all significantly above
their long-term fundamental home price
levels. at means renting clearly is the better
option in those areas, according to Ken H.
Johnson, Ph.D., a real estate economist within
FAU's College of Business.
"ese metro areas are the most at risk
for home price declines, including any future
negative impacts to housing values brought
about by COVID-19," he said. "We're still
waiting to see how the pandemic will affect
the housing market."
Renters who would not invest the money
they would have spent on ownership are still
better off buying a home, according to Eli
Beracha, Ph.D., an assistant professor in the
Hollo School of Real Estate at FIU.
"Homeownership doesn't necessarily
generate attractive rates of return, but it does
force consumers to be more mindful of their
expenses," he said. "Renters should be honest
with themselves. If they aren't going to put their
extra money into the stock market, then the safer
option over the long run would be to own."
Journal
