According to the Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index, the U.S. housing market has continued to move deeper into buy territory, supporting the belief that housing markets across the country remain a sound investment.

The BH&J Index is a quarterly report that attempts to answer the question:

In today’s housing market, is it better to rent or buy a home?

The index examines the entire US housing market and then isolates 23 major cities for comparison. The researchers “measure the relationship between purchasing property and building wealth through a buildup in equity versus renting a comparable property and investing in a portfolio of stocks and bonds.” 

While most of the metropolitan markets examined moved further into buy territory (16 of the 23), markets like Dallas, Denver, and Houston are currently deep into rent territory. In these three markets, it is estimated that renting will top homeownership 7 out of 10 times.

Due to a lack of inventory, the home prices in the Dallas, Denver, and Houston areas have increased by 11.6%, 8.3%, and 6.6% respectively. Home prices in these areas will begin to return to more normal levels once residents realize that renting is not the best option, therefore bringing home affordability back as well.

Bottom Line

The majority of the country is strongly in buy territory. Buying a home makes sense socially and financially, as rents are predicted to increase substantially in the next year. Protect yourself from rising rents by locking in your housing cost with a mortgage payment now.

To Find Out More About the Study: The BH&J Index and other FAU real estate activities are sponsored by Investments Limited of Boca Raton. The BH&J Index is published quarterly and is available online at http://business.fau.edu/buyvsrent.

Some Highlights:

• Historically, the choice between renting or buying a home has been a close decision.
• Looking at the percentage of income needed to rent a median-priced home today (30%), vs. the percentage needed to buy a median-priced home (15%), the choice becomes obvious.
• Every market is different. Before you renew your lease again, find out if you could use your housing costs to own a home of your own!

The National Association of Realtors recently released a study titled ‘Social Benefits of Homeownership and Stable Housing.’ The study confirmed a long-standing belief of most Americans:

“Owning a home embodies the promise of individual autonomy and is the aspiration of most American households. Homeownership allows households to accumulate wealth and social status, and is the basis for a number of positive social, economic, family and civic outcomes.”

Today, we want to cover the section of the report that quoted several studies concentrating on the impact homeownership has on the civic participation of family members. Here are some of the major findings on this issue revealed in the report:

• Homeowners have a much greater financial stake in their neighborhoods than renters. With the median national home price in 2015 at $223,900, even a 5% decline in home values will translate into a loss of more than $11,195 for a typical homeowner.
• Because owners tend to remain in their homes longer, they add a degree of stability to their neighborhood.
• Homeowners also reap the financial gains of any appreciation in the value of their home, so they also tend to spend more time and money maintaining their residence, which also contributes to the overall quality of the surrounding community.
• Homeowners were found to be more politically active than renters with 77% of homeowners saying they had at some point voted in local elections compared with 52% of renters.
• There seems to be a greater awareness of the political process among homeowners. About 38% of homeowners knew the name of their local school board representative, compared with only 20% of renters.
• There is a higher incidence of membership in voluntary organizations and church attendance among homeowners.
• Homeownership does create social capital and provide residents with a platform from which to connect and interact with neighbors.
• Owning a home means owning part of a neighborhood, and a homeowner’s feelings of commitment to the home can arouse feelings of commitment to the neighborhood, which, in turn, can produce interactions with neighbors.

Bottom Line

People often talk about the financial benefits of homeownership. As we can see, there are also social benefits of owning your own home.

*Next Thursday, we will report the study’s findings on the impact homeownership has on a family’s health.

Recently there has been a lot of talk about home prices and if they are accelerating too quickly. As we mentioned before, in some areas of the country, seller supply (homes for sale) cannot keep up with the number of buyers out looking for a home, which has caused prices to rise.

The great news about rising prices, however, is that according to CoreLogic’s US Economic Outlook, the average American household gained over $11,000 in equity over the course of the last year, largely due to home value increases.

The map below was created using the same report from CoreLogic and shows the average equity gain per mortgaged home from June 2015 to June 2016 (the latest data available).

For those who are worried that we are doomed to repeat 2006 all over again, it is important to note that homeowners are investing their new-found equity in their homes and themselves, not in depreciating assets.

The added equity is helping families put their children through college, invest in starting small businesses, allowing them to pay off their mortgage sooner or move up to the home that will better suit their needs now.

Bottom Line

CoreLogic predicts that home prices will appreciate by another 5% by this time next year. If you are a homeowner looking to take advantage of your home equity by moving up to your dream home, let’s get together to discuss your options!

According to the National Association of REALTORS most recent Profile of Home Buyers & Sellers, married couples once again dominated the first-time homebuyer statistics in 2016 at 58% of all buyers. It is no surprise that having two incomes to save for down payments and contribute to monthly housing costs makes buying a home more attainable.

But, many couples are also deciding to buy a home before spending what would be a down payment on a wedding, as unmarried couples made up 14% of all first-time buyers last year.

If you’re single, don’t fret! Single women made up 18% of first-time buyers in 2016, while single men accounted for 8% of buyers. One recent article pointed to a sense of responsibility and commitment that drives many single women to want to own their home, rather than rent.

Here is the breakdown of all first-time homebuyers in 2016 by percentage of all buyers, income, and age:

Bottom Line

You may not be that much different than those who have already purchased their first homes. Let’s get together to determine if your dream home is already within your grasp!