Apartment rents are rising rapidly, up 3.5 percent in 2015, then they are expected to moderate to 3.0 percent in 2016 and 2.7 percent in 2017, according to the Urban Land Institute. But home sales prices are rising even faster, tipping the scales of the rent vs buy equation towards rentals in the dollar for dollar comparisons Millennials face, according to the latest national housing market index produced by Florida Atlantic University and Florida International University faculty.
As of the end of the first quarter of 2015, the housing market in the U.S. and all 13 cities in the index are trending either closer to renting being the superior option or strictly favoring renting over purchasing a home.
Three of the hottest real estate markets in the nation, Dallas, Denver and Houston, are clearly in rent territory, with property pricing out-pacing rents, meaning buyers should proceed with strong caution.
Seven more cities (Miami, Honolulu, Los Angeles, Pittsburgh, Portland, San Francisco and Seattle) are at or near the indifference point between ownership and renting. Here the spread between monthly rent payments and ownership payments appears to be at a point where neither ownership nor renting is statistically favored.
Four cities (Chicago, Cincinnati, Cleveland and Detroit) remain in strong buy territory with scores that have historically favored wealth accumulation through home ownership.