Home prices in most U.S. housing markets are reaching their peak, but there’s no need to fear a repeat housing bust, according to a new joint analysis by Florida Atlantic University and Florida International University. Throughout the majority of the country, home prices have been rising steadily since 2012, and there are signs the runup may be starting to slow.
“Housing markets are slowing, suggesting that we are nearing a peak in housing markets around the U.S.,” says Ken Johnson, a real estate economist at Florida Atlantic University. “But this is good news, as we are pulling back from the brink, unlike we did in 2007.”
Researchers at the universities created the Beracha, Hardin & Johnson Buy vs. Rent Index, which shows that out of 23 metros areas studied, 13 are slightly to moderately in “buy” territory. That means owning a home is more favorable than renting for the majority of residents in that area. On the other hand, 10 metro areas were slightly to moderately in “rent” territory.
“Our data indicates that prices are above their 40-year trend but not significantly so, as they were in 2007,” says Eli Beracha, co-creator of the index and associate professor in the Hollo School of Real Estate at FIU. “Rather than a crash, I anticipate slower growth in prices accompanied by longer marketing times for sellers and increasing inventories, which should bring prices back in conjunction with their 40-year trend.”