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87
FLORIDA
Major Cities Boast Favorable Rental Investment Markets
A recent report released by the Florida Atlantic University
College of Business indicated that it could be a good time to invest
in rental properties, as mortgage rates and home prices increase in
major cities across the country.
According to the Beracha, Hardin & Johnson Buy vs. Rent
Index (BH&J), 18 out of 20 metro areas showed an appreciation
in housing prices as Q1 2017 came to a close. at number has
stayed constant, restricting inventory as demand remains the same,
resulting in markets that swing toward renting rather than buying.
e BH&J uses data from S&P/Case-Shiller's 20-City Price
Index and measures it on a ratio of wealth accumulated through
renting versus wealth accumulated through homeownership. In
eight cities, conditions were favorable for rental investment to
flourish. ose cities include San Francisco, Seattle, Pittsburgh,
Miami, Denver, Houston, Dallas, and Portland, Oregon.
Markets in Honolulu, Hawaii; Kansas City, Kansas/Missouri;
Los Angeles, California; and San Diego, California, favor neither
renting nor buying, but as Q2 draws nearer, these four cities are
liable to favor either market.
e remaining eight cities—Boston, Atlanta, Chicago, Cincin-
nati, Cleveland, Detroit, New York, and Philadelphia— demon-
strate conditions that favor a buyer's market.
e cause of this shift in a handful of regional markets? Ac-
cording to Ken Johnson, one of the index's creators, "e major
drivers for this quarter's scores appear to be slowing rents relative
to the costs of ownership and climbing mortgage rates … us, on
the margin, more potential owners should favor renting and rein-
vesting in a portfolio of stocks and bonds as opposed to ownership.
is shift should slightly lower the demand for ownership and
contribute to the slowdown in housing prices around the country."
