The Chairman of the Index Committee S&P Dow Jones Indices has done an analysis of the cost of housing in regard to buying or renting a home and determined that housing prices have dropped so much that, on financial terms alone, it can be more economical to buy rather than rent.
Price-Income ratios, based on both disposable and per capita disposable income point to moderate gains in the last three months as home prices continue to advance. A comparison of buying and renting shows that the ratio slightly favors buying compared to the average market condition since 1987, leaving room for further gains in housing.
The chart accompanying his opinion piece shows that between 1989 and 2003, home prices were low enough to make it more logical to buy versus rent. From 2003 til 2008, it was better to rent. Since that time though, housing prices have been depressed and still below the tipping point.
More: Rent-Buy and Price-Income Data Show Continuing Improvement in Housing, David Blitzer
Author: John Keith
John A Keith is a licensed real estate broker in Boston, Massachusetts. He helps buyers and sellers of condos and single-family homes in all of Boston’s neighborhoods.
He is also a writer whose work has appeared in South End News, Boston Courant, Back Bay Patch, and Boston Herald.