- Miller Samuel Real Estate Appraisers & Consultants - https://millersamuel.com -

Build Them And They Will Go Rental

The National Association of Home Builders (NAHB) reported in their press release [NAHB] [1] that Builder Optimism Rises For Rental Apartments, Declines For Condos At Year-End 2005.

There are two points that can be made here (I know this is just a press release) regarding the real estate market and whether someone is going to write a check to the mortgage company or the landlord:

For an interesting explanation of the rent versus buy decision, see Houses: Buying Versus Renting [2] by Margaret Smith, Professor of Economics, Pomona and College Gary Smith, Professor of Economics, Pomona College.

She writes:

Comps can help us judge whether the price of a particular house is high or low relative to the prices of other houses, but they tell us nothing about whether housing prices are high or low in any absolute sense. First-time homebuyers invariably ask, “Is now a good time to buy?” Clients who already own homes often ask if trading up is a good investment or if downsizing is a smart financial move. We have also had clients ask if we are in a housing bubble and if they should sell their house and rent until sanity returns.