BH&J Buy vs. Rent Index Shows Home Ownership is a More Attractive Option as Likelihood of Housing Crash Decreases

Please note: the March 2020 BH&J release uses data prior to the escalation of the COVID-19 pandemic. To learn about the effects of the coronavirus on the housing market, visit our special section: "COVID-19: Impacts on Real Estate"

 MEDIA CONTACT: Jim Hellegaard


Family at their new homeBOCA RATON, Fla. (March 11, 2020) – Home ownership is becoming a more attractive option over renting a home in markets across the country as the likelihood of a housing crash decreases, according to the latest national index produced by Florida Atlantic University and Florida International University faculty.

The latest results of the Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index indicate that most housing markets are slowly returning to buy territory, the opposite of what was witnessed from the last housing bust when BH&J scores plummeted quickly. This suggests a stronger fundamental underpinning for housing prices than in the past and a lower likelihood of another housing crash.

The BH&J Index measures the difference in wealth creation between renting and reinvesting versus owning the same property and building equity. BH&J scores approaching +1 strongly suggests individuals would be better off renting and reinvesting as opposed to owning and building equity. Scores approaching -1 favor home ownership over renting. Scores close to 0 suggest a tossup in terms of wealth creation between the two alternatives.

Only two of the 23 metropolitan markets tracked in the BH&J Index (Atlanta and Detroit) experienced moderate increases in their BH&J scores. Meanwhile, 21 housing markets (Boston, Chicago, Cincinnati, Cleveland, Dallas, Denver, Honolulu, Houston, Kansas City, Los Angeles, Miami, Milwaukee, Minneapolis, New York, Philadelphia, Pittsburgh, Portland, San Diego, San Francisco, Seattle, and St Louis) witnessed declines in their scores.

“Ownership and renting are substitutes for one another. Thus, the cost of renting impacts the demand for ownership,” said Eli Beracha, Ph.D., a real estate professor in the Hollo School of Real Estate at FIU and one of the creators of the BH&J Index. “The major cause of the movement in the direction of ownership is the significant increase in the cost of renting relative to the cost of ownership in the twenty-one metros experiencing a decrease in BH&J scores.”

The BH&J Index’s creators all agree that strong economic conditions (low mortgage rates and low levels of unemployment) combined with lower BH&J scores this time around are leading a slow return of property prices to their long-term average.

“The major concern right now is the potential for an economic downturn, which would increase the risk of a crash significantly,” said Ken H. Johnson, Ph.D., a real estate economist in FAU’s College of Business and one of the BH&J Index’s creators.

Comparing BH&J scores from around the country (circa 2006-08) to today’s scores suggests that things should be quite different this time around as the country reaches the peak of the current housing cycle.

“Home prices fell dramatically in 2008 through 2010 around the country and so did BH&J scores,” Johnson said. “The driver of this fall in prices was the fact that property prices had simply risen too high above the equilibrium balance between owning and renting property.”

The BH&J Index is published quarterly and is available online at Due to data availability and the time necessary to calculate the most current index values, the index is produced two months after the end of the quarter.

- FAU -

About Florida Atlantic University:
Florida Atlantic University, established in 1961, officially opened its doors in 1964 as the fifth public university in Florida. Today, the University, with an annual economic impact of $6.3 billion, serves more than 30,000 undergraduate and graduate students at sites throughout its six-county service region in southeast Florida. FAU’s world-class teaching and research faculty serves students through 10 colleges: the Dorothy F. Schmidt College of Arts and Letters, the College of Business, the College for Design and Social Inquiry, the College of Education, the College of Engineering and Computer Science, the Graduate College, the Harriet L. Wilkes Honors College, the Charles E. Schmidt College of Medicine, the Christine E. Lynn College of Nursing and the Charles E. Schmidt College of Science. FAU is ranked as a High Research Activity institution by the Carnegie Foundation for the Advancement of Teaching. The University is placing special focus on the rapid development of critical areas that form the basis of its strategic plan: Healthy aging, biotech, coastal and marine issues, neuroscience, regenerative medicine, informatics, lifespan and the environment. These areas provide opportunities for faculty and students to build upon FAU’s existing strengths in research and scholarship. For more information, visit