Investing" in a home can be a disaster, the recession taught us that.
While many billions have been made investing in real estate, it's not the easy-money sector that people once thought. With interest rates rising sharply just as people are starting to get back on their feet, the tailwinds home prices have been experiencing recently could moderate quickly or, worse, reverse course.
Real estate is still about location, location, location, and some cities are at a greater risk than others. Those that will feel the sting from rising rates first are those that are already priced on the outer limits of affordability.
The price-to-rent ratio is one way to reliably measure how "expensive" owning a home in a market is relative to the other housing alternatives available to buyers. A high ratio means buyers are paying a hefty premium for their slice of the American dream when they could just rent instead. The question with these already richly priced cities is: Will buyers soon be paying too much?
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