Renting Cheaper Than Buying

In case you missed this submission in the comments section, the Economist.com ran an article called "Still Want To Buy". The subject was the global RE market and rents. It has been reported for a while that rent prices aren't keeping up with home prices. The story asserts that as first time buyers have been priced out investors can't get a decent return for their buck.

"The ratio of prices to rents is a sort of price/earnings ratio for the housing market...To bring the ratio of prices to rents back to equilibrium, either rents must rise sharply or prices must fall." Renters can't get a mortgage to pay their landlords, so guess which way that one is going.

The story cites many examples where dwellings rent for much less than the owner is paying for them. It is interesting that the situation is worse in countries other than the US; Italy, Spain, Britain, France and Australia. The housing bubble is truly global. Thanks to Ms. P for the link.