USA Update: Real House Prices and Price-to-Rent
4 comments so farCalculated Risk Finance & Economics blog, July 26, 2011
Real House Prices
Real House Prices in the USA (click to enlarge)
Below are two graphs showing real prices and price-to-rent ratios for residential homes in the USA. Real prices are back to 1999/2000 levels, and the price-to-rent ratio is also back to 2000 levels in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices. In real terms, the National index is back to Q4 1999 levels, the Composite 20 index is back to August 2000, and the CoreLogic index back to March 2000.
Price-to-rent
This graph shows the price to rent ratio (January 1998 = 1.0). On a price-to-rent basis, the Composite 20 index is back to October 2000 levels, and the CoreLogic index is back to March 2000. Note: the measure of Owners’ Equivalent Rent (OER) was mostly flat for two years – so the price-to-rent ratio mostly followed changes in nominal house prices. In recent months, OER has been increasing – lowering the price-to-rent ratio.
Price to Rent Ratio (click to enlarge)
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Thursday, August 18th, 2011 at 5:27 am and is filed under buy house in usa, buying real estate in usa. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Useful informations! Thanks for sharing…
Hi there, I’ve been checking your site and there’s some really interesting info. I’m also a european citizen (Spain) and for a couple of years now I’ve been interested in buying one or two condos in Miami. The idea is to benefit from future apreciation and in the meantime making a living out of the rent -but not depending only on this income-. I have some basic doubts though: 1) You say foreigners are allowed to buy property in the US, but does this give them residence? Or how did you manage to live in the US being european? 2) What’s your opinion on the Miami market, would you say it’s easy to find tenants? Thank you and keep your posts coming! Alfonso
Hi, I’ve been checking your site and there is some very interesting info. I’m also a European citizen (Spain) and I’ve become interested in investing in one or two condos in Miami, specially after the 2008 mortgage bubble burst, which has produced in some cases a 50% decrease in property value in that city. Mi idea is to rent the property as to obtain a monthly income that allows me to partially cover my expenses whilst living in Miami and waiting for their value to return to the pre-crisis prices. There are a couple of questions which you may help me solve: 1) Does buying property in the US provide foreign citizens with the possibility of having legal residence in this country? 2) Is it a good time to buy property if you intend to promptly find tenants? I’ve read that mortgages have very low rates for those who buy a house, so maybe people prefer to take a credit from the bank and buy a property instead of renting. Thank you for your opinion.
Do you recommend Condo’s or houses? I thought the better investment would be a house seeing that you dont have the strata like fees? Also, how dod you go about setting up an LCC and bank account? I have been told that Wells only allow the setup if you are physically in the bank and are able to sign?