BOCA RATON, Fla., Feb. 08, 2024 (GLOBE NEWSWIRE) -- As many Americans struggle to find homes to buy, one place has emerged as the best area to purchase a home in the country, according to researchers at Florida Atlantic University and Florida International University.
New Orleans offers the best deal for buyers in the country in terms of price based on housing premium/discount and price-to-rent-ratio, according to December 2023 data from the Top 100 U.S. Housing Markets and the BH& J National Price-to-Rent Report.
Housing prices in New Orleans are selling 5.09 percent below the area’s long-term pricing trend. The average home price currently in New Orleans is $235,103, however, the average home price should be $247,721 based on statistical estimates, suggesting that buyers are getting a discount with today’s prices.
The area’s price-to-rent ratio is 12.53 percent below average as well, suggesting that it is preferable to buy versus rent.
“It’s incredibly difficult to time the bottom of a housing market, but New Orleans’ price-to-rent ratio strongly favors ownership over renting at this point and the fact that people can buy at a discount relative to the area’s long-term pricing trend suggests that this is clearly the best buy among the nation’s largest metros,” said Ken H. Johnson, real estate economist with FAU’s College of Business.
The Top 100 U.S. Housing Markets and the BH& J National Price-to-Rent Report are two monthly indices produced by Johnson and fellow researchers Eli Beracha, Ph.D., director of FIU’s Hollo School of Real Estate and William Hardin, Ph.D., dean of FIU’s College of Business as part of FAU’s Real Estate Initiative. The Top 100 U.S. Housing Markets looks at the difference in the actual average home price in a city and compares it to the long-term pricing trend for the city to calculate how overvalued or undervalued housing markets are in the nation’s largest metropolitan areas using publicly available data from Zillow. The National Price-to-Rent Report calculates the number of dollars in property price paid for each dollar in annual rent to show whether renting or ownership is preferable. Higher price-to-rent ratios and ratios above the recent local average favor renting over buying.
The Miami metropolitan area, however, is an area of concern for the average homebuyer, researchers warned.
“Most of the country’s prices are returning to their long-term trends slowly but surely. Miami is the only place in the country where not only have home prices not gone down as most cities have witnessed recently, but also the price-to-rent ratio is the highest it has been in almost nine years. Additionally, the area’s housing premium is increasing, indicating that local housing prices are rising faster than typical property appreciation,” Beracha said.
The typical home in South Florida is about 36 percent overvalued, and its price-to-rent ratio is currently at a 7.81 percent premium.
“This set of circumstances does make me a little nervous,” Johnson added. “Our prices should be leveling off. While I do not think we will have a crash like we did 16 years ago, this is not a good sign. The patient should be getting slightly better at this point, not getting slightly worse.”
Amber Bonefont Florida Atlantic University College of Business 5617579188 abonefont@fau.edu
