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Where's Housing Headed? Follow Rents

February 17, 2010 by Marco Santarelli

It may not be the most widespread measure of housing prices, but if you want to follow a powerful driver, look at rents.

Specifically, it's the rents Americans pay on condos, apartments or houses that are about the same size, and share the same neighborhood as your ranch or colonial, that in the end determine what your house is worth.

"If you look at the trend in rents to see where housing prices are headed, you're looking at the right measure," says Yale economist Robert Shiller.

In recent reports, Deutsche Bank demonstrates how steady or even falling rents have pulled down housing prices, to the point where in many markets it costs about the same amount to own as to lease. That's a golden mean that America hasn't seen in almost a decade. The DB research also offers convincing evidence that the wrenching adjustment in housing prices is finished for much of the nation, with a bit more pain to come in selected areas.

Before we get to the numbers, let's examine why rents exercise a kind of gravitational pull over home prices.

[Read more…]

Filed Under: Economy, Growth Markets, Housing Market, Real Estate Investing Tagged With: housing forecast, Housing Market, housing outlook, Housing Prices, Real Estate Investing, rents

Further Home Price Declines Forecast Despite Recent Gains

October 27, 2009 by Marco Santarelli

Contrary to popular opinion, home prices have not bottomed out, according to the financial information and analysis firm Fiserv.

The firm projects median home prices will drop 11.3 percent by June 30 of next year. It predicts declines in 342 of 381 markets over the next year. Only then will prices stabilize, and rise 3.6 percent in 2011, the firm predicts.

The S&P/Case-Shiller Home Price Index had seemed to indicate prices had already stabilized. The composite index of 20 cities rose in May, June, and July, and home prices gained 3.6 percent nationwide.

But it now looks like that may have been a blip due to the impact of the tax credit for first-time homebuyers, analysts said. By the end of November, when it expires, the credit will have been used by 1.8 million homebuyers, at least 355,000 of whom would not have bought a house without the tax break.

In Fiserv’s latest forecast, the markets that will have the steepest declines are those with the greatest number of foreclosures.  [Are these new opportunities for real estate investors?]

[Read more…]

Filed Under: Housing Market Tagged With: Case-Shiller Home Price Index, home prices, Housing Market, Housing Prices, Real Estate Markets

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