The Real Deal New York

National price growth in real estate unsustainable, experts say

Buying a home may no longer make financial sense for many

February 21, 2014 06:00PM

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While real estate used to be a great investment for the average American, that is less and less likely, as the market morphs, industry experts said.

Some say, looking at data for real estate markets in U.S. metropolitan areas, that the current level of price growth is unsustainable. Home prices have risen 14 percent in 2013, according to a 20-city composite index by S&P/Case-Shiller. As a result, one widely tracked metric — the average cost of a home divided by the average rent — has grown to 14 nationally, well over the accepted number for a “normal” market, which is 12.

“You can’t buy now and expect a big gain,” said Morris Davis, an associate professor in the real estate department at the University of Wisconsin’s business school, to the Journal. “There’s more risk than there was.” [WSJ] – Angela Hunt

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