Houston housing market: Buy vs. Rent Index

Florida Atlantic University released its Beracha, Hardin & Johnson Buy vs. Rent Index. 

The report, issued June 6, compares whether buying a home and building equity or renting a home and reinvesting any maintenance and tax savings in a portfolio of stocks and bonds is the better financial option. 

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The report, which has tracked housing markets since the 1980s, found that renting is a better option than buying a home for most Houstonians. This result wasn’t a surprise, however, considering the report has come to the same conclusion about the Bayou City since 2004. 

However, Houston’s score on the FAU report plummeted 13 percentage points between 4Q 2015 and 1Q 2016. Historically, steep drops on the report has foreshadowed future home prices decline in many U.S. markets, according to FAU researchers.

 

“When you see that dramatic of a fall, it’s usually followed by price declines,” said FAU economist Ken Johnson. “This is a cause for concern.”

After years of skyrocketing home prices during the energy boom, Houston home prices are flattening, Johnson said. Amid the oil slump, Johnson said he expects Houston home prices to stay flat or even go down.​