91社区 Study: Home Price Corrections Most Likely in Washington, Texas
Spokane, Washington and Austin, Texas are the two U.S. housing markets most exposed to price corrections, meaning consumers in those areas should strongly consider renting rather than buying, according to a new report from researchers at 91社区 and Florida International University.
The BH&J National Price-to-Rent Ratios Monthly Report measures the relative cost of owning to renting in 100 metropolitan areas nationwide.
, Ph.D., an economist in 91社区鈥檚 , also co-authors separate monthly indexes revealing the most overvalued U.S. markets for and . Price-to-rent ratios offer a more complete picture because they show the relative choice within a housing market between buying and renting.聽聽
Spokane leads the U.S. with a of 32.08 percent above the long-term average, followed by Austin鈥檚 29.62 percent. Nashville, Tennessee (26.68 percent); Raleigh, North Carolina (25.86 percent); and Seattle (24.58 percent) complete the top five.
Washington, Texas, Utah and North Carolina each have two metros ranked in the top 10. The full rankings can be found .
鈥淚n markets with these high ratios, it is reasonable to expect price corrections because renting is much more favorable there,鈥 Johnson said. 鈥淩enting will slow down demand for homeownership, which will, in turn, affect prices.鈥
Many of the highest price-to-rent ratios are in Western U.S. markets. Even though Florida has some of the nation鈥檚 most overvalued housing and rental markets, the price-to-rent ratios are fairly low.
鈥淭he recent spike in metro Miami rents has helped keep the price-to-rent ratio in the area relatively near its average,鈥 said , Ph.D., dean of FIU鈥檚 . 鈥淏ut it will be the production and delivery of new homes and apartments that will ultimately drive long-term housing affordability in the area.鈥
Despite rapidly rising rents over the past two years, renting is the better option in all 100 markets surveyed, according to the report.
Stamford, Connecticut (4.52 percent); Virginia Beach, Virginia (4.76 percent) and Syracuse, New York (4.90 percent) have the three lowest ratios.
鈥淚n these markets, renting still beats buying, but the decision isn鈥檛 as clear-cut as it is in Spokane and other metros with much higher ratios,鈥 said , Ph.D., of FIU鈥檚 .
The researchers calculate the price-to-rent ratio as the average home price for an area divided by the area鈥檚 annual rents for the average property. Data is provided from the Zillow Home Value Index and the Zillow Observed Rental Index and includes single-family homes, townhomes, condominiums, co-ops and apartments.
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