Downward Pressure on Demand for Homeownership Present in Major U.S. Housing Markets, BH&J Buy vs. Rent Index Shows
Mar 11, 2019, 07:00 ET
BOCA RATON, Fla., March 11, 2019 /PRNewswire/ -- Many U.S. metropolitan residential real estate markets are exhibiting downward pressure on the demand for homeownership, according to the latest national index produced by Florida Atlantic University and Florida International University faculty.
"Historical evidence indicates that home prices adjust to these directional pressures," said Ken H. Johnson, Ph.D., a real estate economist and one of the creators the Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index in FAU's College of Business.
BH&J Index scores approaching "1" indicate significant downward pressure on the demand for homeownership. Scores hovering around "0" indicate neutral pressure, while scores approaching "-1" imply strong upward pressure on the demand for homeownership.
Currently, 19 of the 23 metropolitan markets tracked in the index produce scores indicating slight to significant downward pressure on the demand for homeownership. Of these, three metro areas standout. Dallas (.98), Denver (.81) and Houston (.72) are all producing scores indicating significant downward pressure. Five metro areas are exhibiting signs of moderate downward pressure, including Kansas City (.38), Pittsburgh (.38), Seattle (.38), San Francisco (.37) and Miami (.36).
Eleven metros (Atlanta, Boston, Cincinnati, Honolulu, Los Angeles, Milwaukee, Minneapolis, Philadelphia, Portland, San Diego and St. Louis) have BH&J scores between 0 and .30, suggesting slight to mild downward pressure on the demand for home ownership.
Four metropolitan areas are producing scores indicating slight upward pressure on the demand for homeownership – Cleveland (-.16), Chicago (-.14), New York (-.08) and Detroit (-.04).
"Relatively speaking in terms of price, these markets are the most stable in our measured group," said Eli Beracha, Ph.D., real estate economist and co-creator of the index in the Hollo School of Real Estate at FIU.
Both Johnson and Beracha agree all signs point toward peaking housing markets around the country with the greatest current threat to housing values being uncertainty over the future of mortgage rates.
"We are in the business of information production rather than predications," said Johnson. "During the last housing cycle very little information was available to consumers and real estate professionals, which exacerbated the results of the downturn. Therefore, we hope to produce information that allows for more informed real estate decision making with the BH&J Index."
The BH&J Index is published quarterly and is available online at http://business.fau.edu/buyvsrent.
MEDIA CONTACT: Jim Hellegaard
561-319-2233, [email protected]
SOURCE Florida Atlantic University College of Business