May 19, 2007
I think I'm turning HousingPANIC, I think I'm turning HousingPANIC, I really think so...
Only problem with this MSM article (one day they'll think, not just type) is that they say rents are too low. Uh, rents are where the market says rents are, and hint, they're going lower, not higher.
Cheaper To Rent
These are scary days in the housing market. Sales of existing homes in the first quarter of the year were down 8.4%, but prices have barely budged, dropping only 1.8%. Many potential buyers are wondering if it makes sense to rent for a year and hope that as sales slow even more, prices will finally come down significantly.
In most cities, renting rather than buying is a good idea for now. Green Street Advisors, a research firm specializing in real estate investment trusts, looked at a 19-year average ratio of monthly mortgage payments to monthly rent payments for the 50 largest markets in America. They then looked at a current snapshot of that same ratio and calculated how much rents would have to change to bring the ratio back to its 19-year average.
In 80% of markets, rents are more than 10% below their historical averages, and home prices are too high.
If you're looking to buy in Portland, Ore., you should probably think twice. Rents there are 61% too low. The current ratio of monthly mortgage payments to monthly rents in Portland is 2.04, versus a 19-year average of 1.27.