RISMedia
  • News
  • Premier
  • Reports
  • Events
  • Power Broker
  • Newsmakers
  • More
    • Publications
    • Education
No Result
View All Result
  • Agents
  • Brokers
  • Teams
  • Marketing
  • Coaching
  • Technology
  • More
    • Headliners New
    • Luxury
    • Best Practices
    • Consumer
    • National
    • Our Editors
Join Premier
Sign In
RISMedia
  • News
  • Premier
  • Reports
  • Events
  • Power Broker
  • Newsmakers
  • More
    • Publications
    • Education
No Result
View All Result
RISMedia
No Result
View All Result

Price-to-Rent Ratios Foreshadow Further Home-Value Declines

Home Agents
By Jesse Williams
March 7, 2023
Reading Time: 3 mins read
Price-to-Rent Ratios Foreshadow Further Home-Value Declines

After both rental costs and home prices soared far above what historic trends would predict during the pandemic, the path back to more normal price ratios has been uneven, according to the latest data from researchers at Florida Atlantic University (FAU) and Florida International University (FIU), with the trend currently favoring renters.

While both rental costs and home prices continue to swing above historic trends, the difference between these two numbers makes renting more favorable in most major metros, as home prices have mostly resisted major declines while rent increases have moderated significantly. 

“Home prices are down, but they are still too high and near record levels, so we expect further price corrections in the future,” said Ken H. Johnson, a co-author of the report and an economist in FAU’s College of Business.

Homes remain broadly overvalued, according to data gathered through a similar project run by Eli Beracha (fellow FIU researcher) and Johnson, while at the same time, rental premiums have shrunk. Rental costs are now 5.74% overvalued, falling from 9.85% overvalued last June.

According to the National Association of REALTORS® (NAR), in 2019, it was better to rent than buy in 34 out of 50 states. 

In the short term, Johnson and fellow FIU researchers Beracha and William Hardin say that renting is financially more favorable. But in the longer term, that price-to-rent ratio should move back toward historic levels, especially in areas where that price-to-rent ratio is particularly offset from expected levels.

Currently, 10 metros have price-to-rent ratios that are at least 15% higher than expected, with a majority of those located in the South. Only two metros had ratios that were below historic averages—that is, these cities were even more favorable to owning than trends would indicate.

Those two cities were Springfield, Massachusetts, and Cape Coral, Florida. 

The researchers noted that Cape Coral is still recovering from devastation caused by Hurricane Ian, and this data point might have more to do with the damage caused to housing stock than it has to do with broader economic issues.

The choice to buy or rent is always more complex, even from a purely financial standpoint. From tax breaks to maintenance and long-term equity building, the simple price-to-rent ratio is only part of the equation. 

Beracha suggested that those who choose to rent have to make “disciplined” investment decisions in order to mimic the financial benefits of homeownership.

“In order to replicate equity creation, renters should invest the money they otherwise would have spent on maintaining their homes,” he said.

Here are the top metros where renting is most favorable compared to owning: 

  1. McAllen, Texas
  2. San Jose, California
  3. Nashville, Tennessee
  4. Durham, North Carolina 
  5. Houston, Texas
  6. Wichita, Kansas     
  7. Des Moines, Iowa
  8. Charlotte, North Carolina
  9. Greenville, South Carolina
  10. Jacksonville, Florida

Here are the top metros where owning is most favorable compared to renting:

  1. Cape Coral, Florida
  2. Springfield, Massachusetts
  3. Oxnard, California
  4. New Orleans, Louisiana
  5. Virginia Beach, Virginia
  6. Fresno, California
  7. Akron, Ohio
  8. Providence, Rhode Island
  9. Worcester, Massachusetts
  10. New Haven, Connecticut
Tags: FAUFIUHome ValuesHousing Markethousing recessionMLSNewsFeedOvervalued MarketsRent PricesRental Market
ShareTweetShare

Jesse Williams

Jesse Williams is content director for RISMedia Premier.

Related Posts

Amid ‘Scary Headlines,’ How One Team Achieved a Record Q1
Industry News

Amid ‘Scary Headlines,’ How One Team Achieved a Record Q1

May 12, 2025
Forbes
Agents

Forbes Global Properties and RBN Announce New Alliance

May 12, 2025
Keeping it R.E.A.L.: the Psychology of Successful Agent Onboarding
Agents

Keeping it R.E.A.L.: the Psychology of Successful Agent Onboarding

May 12, 2025
boost
Industry News

Homes.com Offers Free ‘Boost’ for Agents and Homeowners ‘Blackballed by Zillow’

May 12, 2025
Weichert Named a Top Low-Cost Franchise by Entrepreneur Magazine
Industry News

Weichert Named a Top Low-Cost Franchise by Entrepreneur Magazine

May 12, 2025
Governor Appoints J.B. Goodwin to Texas Real Estate Commission
Industry News

Governor Appoints J.B. Goodwin to Texas Real Estate Commission

May 12, 2025

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Tip of the Day

To Win Buyers, Be a Local Market Expert

Ready to stand out? These six strategies show buyers why you’re the agent they need. Learn more.

Business Tip of the Day provided by

Recent Posts

  • Amid ‘Scary Headlines,’ How One Team Achieved a Record Q1
  • Forbes Global Properties and RBN Announce New Alliance
  • Keeping it R.E.A.L.: the Psychology of Successful Agent Onboarding

Categories

  • Spotlights
  • Best Practices
  • Advice
  • Marketing
  • Technology
  • Social Media

The Most Important Real Estate News & Events

Click below to receive the latest real estate news and events directly to your inbox.

Sign Up
By signing up, you agree to our TOS and Privacy Policy.

About Blog Our Products Our Team Contact Advertise/Sponsor Media Kit Email Whitelist Terms & Policies ACE Marketing Technologies LLC

© 2025 RISMedia. All Rights Reserved. Design by Real Estate Webmasters.

No Result
View All Result
  • Home
  • Premier
  • Reports
  • News
    • Agents
    • Brokers
    • Teams
    • Consumer
    • Marketing
    • Coaching
    • Technology
    • Headliners New
    • Luxury
    • Best Practices
    • National
    • Our Editors
  • Publications
    • Real Estate Magazine
    • Past Issues
    • Custom Covers
  • Events
    • Upcoming Events
    • Podcasts
    • Event Coverage
  • Education
    • Get Licensed
    • REALTOR® Courses
    • Continuing Education
    • Luxury Designation
    • Real Estate Tools
  • Newsmakers
    • 2025 Newsmakers
    • 2024 Newsmakers
    • 2023 Newsmakers
    • 2022 Newsmakers
    • 2021 Newsmakers
    • 2020 Newsmakers
    • 2019 Newsmakers
  • Power Broker
    • 2025 Power Broker
    • 2024 Power Broker
    • 2023 Power Broker
    • 2022 Power Broker
    • 2021 Power Broker
    • 2020 Power Broker
    • 2019 Power Broker
  • Join Premier
  • Sign In

© 2025 RISMedia. All Rights Reserved. Design by Real Estate Webmasters.

X