BH&J Buy vs Rent Index - Update August 2018

[Keith Meyer]

New update on the BH&J Rent vs Buy Index. https://business.fau.edu/departments/finance/real-estate-initiative/bhj-buy-vs-rent-index/bhj-summary/ Interesting to note that most major markets have officially crossed over, where renting your residence and reinvesting what you would've spent on a home makes more financial sense than buying. I'm definitely seeing that mentality played out here in San Diego, with myself included for the time being. Are you seeing this transition in your markets?

[Dan H.]

Some of my thoughts regarding the survey as it pertains to San Diego: 1) our best purchase ever was in Sept 1999 when we were last in the better rent than buy category 2) the cash flow in San Diego has always ranged between poor and ok.  San Diego is an appreciation market.  Appreciation prediction is difficult.   3) the index states it takes into account long term appreciation but was not clear if this was a forecast forward or a look backwards.  However, I suspect that it is a forecast forward otherwise, if using historical appreciation in San Diego, owning would out perform renting especially if calculated as though property was financed.  Have you seen Case-Schiller property appreciation graphs on San Diego.  4) rent rates traditionally lag purchase in both directions.  The fact that housing has increased much more than rents historically indicates that rent appreciation will be greater than property appreciation for a while. 

In summary, I am still seeking smart buy n hold RE purchases in San Diego.