Recent times have seen a shift in U.S. housing market sentiments as renting is being preferred over buying. As per research conducted by Florida Atlantic University and Florida International University faculty, in 16 out of 23 major metropolitan cities, renting has outperformed ownership. These cities include Atlanta, Dallas, Denver, Houston, Los Angeles, Miami, San Francisco, and Seattle. It is still better to buy than rent in much of the Midwest and Northeast, with Chicago and Cleveland showing the best ownership scores.
The monthly costs for purchasing and maintaining a self-occupied house is up by 14% over the past year, this is greater than three times the annual increase in rent rates nationally. Going by the trends, renting and reinvesting the received proceeds will lead to more wealth creation than maintaining a self-purchased home.
Housing prices have started to escalate as the new developments are slowing down and there is a short supply of existing homes. As per the July home and rent prices, the numbers went against ownership as ownership in only 35% of the counties were comparatively cheaper.
U.S. housing markets were skewed toward rent last time in June 1999. A total reversal happened in January 2010 when the housing markets were bent on the ownership segment. Existing-home-sales fell for the fourth-consecutive month in July to their lowest level in two years as per a report published in August.
The restrictions on immigration and tariffs on imported lumber have increased the cost of production as it is difficult for builders to find the necessary labor and materials complete construction in a cost-effective way. As per the National Association of Home Builders, the expensive cost of construction is a more burning issue in the hot urban markets where land is costly and zoning can be restrictive.
San Francisco and Miami have experienced a sharp rise in housing prices because of the falling inventory of new housing stock. The Great Recession had a severe impact on the other markets like Detroit which haven’t been able to make up for the losses suffered.
