Home Prices Are Historically High Next to Rents. Don’t Panic.
The ratio is well above the levels that preceded the last housing crash. But there might be extenuating circumstances.
When housing prices and rents get out of kilter, something presumably has to give eventually.
Photographer: Elijah Nouvelage/Bloomberg
Market rents in the US are, depending on which measure you look at, either rising slowly or falling outright. Home purchase prices, after a slight dip last year, are climbing again. Prices and rents seem to have disconnected early in the Covid-19 pandemic, and that disconnect has mostly grown ever since.
Take a longer view, with the ratio of US home prices to rents calculated by the Organization for Economic Cooperation and Development, and prices are historically high — with the price-rent ratio about 6 percentage points higher than in the lead-up to the housing price collapse of 2006 to 2011.