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Data Suggests Residential Housing is a Sound Investment

The latest national index produced by the Florida Atlantic University and Florida International University faculties indicate the United States housing market as a whole is moving marginally deeper into buy territory. According to the recent report from the universities, this trend suggests that, on average, the majority of residential housing markets around the country are in good shape and remain a sound investment.

Based on numbers from the end of the second quarter, the latest Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index comes on the heels of the latest S&P/CoreLogic Case-Shiller Home Price Index, which found home prices climbed nationally 5.1 percent since June 2015. Both indices incorporate property appreciation from housing markets around the country, but unlike Case-Shiller, the BH&J Index adds additional rental, maintenance, and alternative investment data streams, among others, to indicate when and why housing markets might be changing direction.

"Housing prices, in general, continue to slow and when considered in light of the recent trends in the Buy vs. Rent Index signal that ownership remains an excellent investment for the majority of Americans," said Ken Johnson, Ph.D., a real estate economist who is one of the index's authors and an associate dean of graduate programs and professor in FAU's College of Business.

The U.S. housing market has moved marginally more in favor of homeownership over renting a comparable property and investing monthly rent savings in a portfolio of stocks and bonds, according to the report. Overall, 15 of the 23 metropolitan markets investigated are trending more in favor of ownership since last quarter.

Additionally, the report shows that cities such as Honolulu, Kansas City, Los Angeles, Miami, Pittsburgh, Portland, San Francisco and Seattle are considered to be minimally in rent territory and show signs of slowing. The U.S. as a whole and all but three of the remaining metro areas remain in buy territory, favoring ownership as a way to create more wealth, on average.

"Many of the hardest hit metropolitan areas during the real estate crash are showing signs of resilience as the cost of ownership relative to the cost of renting remains more in balance," said Eli Beracha, Ph.D., co-author of the index and assistant professor in FIU's T&S Hollo School of Real Estate. "There are very few signs to indicate a market crash in these cities."

About Author: Seth Welborn

Seth Welborn is a Harding University graduate with a degree in English and a minor in writing. He is a contributing writer for MReport. An East Texas Native, he has studied abroad in Athens, Greece and works part-time as a photographer.
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