A Report On The Housing Market

1659 WordsMay 26, 20167 Pages
This report reviews a number of factors with the housing market, starting with the rent/price ratio, and covering relevant economic events and factors specific to renting and home ownership. Rent/Price Ratio Data The rent/price ratio data over a fourteen-year span from first quarter 2000 through first quarter 2014 tracks the trends of the housing market leading into the housing crisis that started in 2007 and its rocky path to correction. The start of this period shows a ratio of 4.7 percent, followed by a downward trend to its lowest point of 3.13 percent in the second quarter of 2006. The high point occurred in the first quarter of 2012, followed by another albeit smaller downward trend. These downward trends are clearly evident when viewing the data in a simple line chart, as shown in Appendix A. As this ratio tracks downward, renting becomes favorable to buying; conversely, as the ratio trends upward buying is more favorable as compared to renting. (Luea, 2015) The rent/price ratio, also calculated as the price/rent ratio, compares the cost of renting to home ownership. (Investopedia, n.d.) The data used to track these trends is based on the S&P/Case-Shiller home price index, developed in 1980 by Allan Weiss, Karl Case, and Robert Shiller, tabulated by Fiserv, Inc., and distributed by Standard & Poor’s. (Fontinelle, n.d.) Housing prices and stock are key indicators of economic performance. (Fontinelle, n.d.) In 2005, Robert Shiller warned there was a

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