Should You Buy Or Rent?

Rents have doubled as a ratio of home prices over the past couple of years in places such as the San Francisco Bay Area.

Home prices are expected to drop another 5% in 2011 while rents will climb about 5%.

David Leonhardt interviews economist Mark Zandi:

Looking at the relative prices of buying and renting homes in Silicon Valley, Manhattan and a few other places is enough to make you wonder whether parts of the housing market are still due for a crash. To consider that question in more detail, I had a conversation with Mark Zandi, the chief economist at Moody’s Analytics, which provided much of the data for my column:

Q. I’m struck at how much higher the rent ratio still is in many places, relative to its average from 1990 to 2010. It’s about 18 in Washington (relative to a 1990-2010 average of 13), about 17 in Boston (relative to 15) and 15 across all metropolitan areas (relative to 11). Is there any reason to think the ratio should remain higher in the future than it was in the not-too-distant past? Or should we expect the ratio to continue falling in coming years, either through further house-price declines or through rent increases?

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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