Downward pressure on the demand for homeownership is lessening in major housing markets across the United States as the nation nears the peak in the current housing cycle, according to the latest national index produced by Florida Atlantic University and Florida International University faculty.

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All but four of the 23 metropolitan markets tracked in the Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index are well above their long-term pricing trend, some dramatically so, as indicated by their BH&J Index scores. Those cities include Atlanta, Boston, Cincinnati, Dallas, Denver, Honolulu, Houston, Kansas City, Los Angeles, Miami, Milwaukee, Minneapolis, Philadelphia, Pittsburgh, Portland, San Diego, San Francisco, Seattle and St. Louis.

"This is quite worrisome," said Eli Beracha, Ph.D., real estate economist and co-creator of the index in the Hollo School of Real Estate at FIU. "However, the trend towards lower BH&J scores is a good sign that the nation's housing markets are pulling back from the edge of potential disaster."

BH&J Index scores approaching 1 indicate extreme downward pressure on the demand for homeownership, making it less desirable than renting and reinvesting and more likely for housing prices to fall. Scores approaching 1 are typically driven by some combination of fundamentally overpriced housing, rising mortgage rates and highly performing alternative investments (stocks and bonds). Scores approaching -1, on the other hand, are driven by opposite performances of these financial instruments and suggest extreme upward pressure on the demand for ownership with a likely increase in prices soon to follow.

The index's creators agree that slowing property prices in combination with falling mortgage rates and a slowdown in the stock market have worked together to cause the recent decrease in BH&J scores around the country. They believe that the peak of the nation's current housing cycle is near and see the housing market going one of two ways.

"Housing markets will either soon experience a slow reversion to a long-term pricing trend or experience a rapid fall in prices below this same trend with a slow reversion," said Ken H. Johnson, Ph.D., a real estate economist and one of the creators the BH&J Index in FAU's College of Business. "We hope for the former and fear the latter."