With housing markets around the U.S. nearing the peak in their cycles, renters who reinvest their money have an increasingly better chance at creating wealth than individuals who purchase a home, according to the latest national index.
"On the heels of information concerning slowing housing starts, rising mortgage rates, decreased demand and unsustainable price increases, these numbers provide additional evidence that housing markets around the country are slowing, resulting in many to opt for renting," said Ken Johnson, Ph.D., a real estate economist and one of the index's creators in FAU's College of Business.
Of the 23 separate metro areas, many are nearing the top of their current housing cycle, meaning they are above their long-term pricing trend.
The biggest contributor to the rising cost of ownership is rising house prices.
The current scores driving the markets in the direction of renting and reinvesting appear to be the results of higher mortgage rates, increase in returns, on average, in the stock market, and the cost of ownership, which includes your mortgage payment, taxes, insurance, maintenance, etc.
All of these costs are rising faster than the cost of renting a comparable property. Therefore, renters who take the money they're saving each month and reinvest it are going to build wealth faster than those who buy a home, on average.