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My Two Cents

Rent-to-price ratio

Chris Farrell Feb 25, 2009

Rent and ownership are competing markets. Looking at the rent to price ratio is a quick way of judging whether homes are overvalued or not. Calculated Risk ran the numbers off the latest Case-Shiller national home price data.

It looks like prices still have a ways to fall, although perhaps not much more. The wild card is that rental prices are alos coming down in a lot of markets, which will put additional downward pressure on home prices.

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