High Rent and More Homeownership in Major Financial Centers – theMReport.com
In major financial centers in the U.S. and around the globe, rents for one-bedroom homes tend to be high, with some exceptions. The top three most expensive financial centers in the world are all in the U.S., with the average rent being around $3,000 for a one-bedroom. RentCafe compiled a list of the 30 top financial centers which include New York, San Francisco, Chicago, and Boston.
RentCafe’s data found that U.S. cities, specifically financial centers, tend to have higher rents than the rest of the world. New York, for example, is ranked No. 2 in RentCafe’s list of top financial centers, but moves up to the first position in rent price. San Francisco moves from the sixth position in financial centers, but No. 2 in rent cost worldwide. These two cities along with Boston take up the top three spots in RentCafe’s ranking of average rent in world financial centers. Only two U.S. cities, Chicago and Washington, D.C., move down in the rent ranking compared to their financial center ranking.
The rising rent costs could mean now is a good time to buy a home in the U.S., especially in high-rent financial centers like New York and San Francisco, as high rents in these areas may cause some consumers to switch from renting to homeownership. Using data from the Beracha, Hardin & Johnson (BH&J) Buy vs. Rent Index, MReport previously reported that as rent prices go up in an area, homeownership may become a more viable option. Fifteen of the 23 U.S. cities covered by the BH&J index were in a “buy” territory, as opposed to “rent.”
“This is great news for home ownership and the financial returns to ownership,” said Johnson, a real estate economist who is an associate dean of graduate programs and professor in FAU’s College of Business. “We are not where we were in 2012, when nearly any purchase was a sound financial decision. However, overall, we are now in a situation where aggressive marketing from sellers combined with due diligence and sound negotiation from buyers is creating a housing market that’s more in line with what we’ve seen historically.”