Yesterday I wrote about the continuing spotty recovery in the US construction market. Today I saw an article from economist Jed Kolko that dovetailed nicely. His research indicates that in the 100 largest cities, buying a home is 45% cheaper than renting. He compares mortgage payments and taxes vs rents. The actual list of cities shows a gap from 24% to 70%.

I know we’ve been building lots of apartments in recent years and it seems many other contractors have also jumped into this market. So with all the new apartments being built (with high rents that follow new construction costs) and all the foreclosed houses starting to come back on the market, some price adjustments seem likely.

I’d expect to see rents start to come down and home prices go up a bit. Be careful not to get caught too far on the wrong side of this change.

As an aside, it’s interesting to see a sharp economist provide insights. Jed Kolko’s page says, “He transforms real estate data, economic trends, and public policy debate into digestible insights for home buyers, sellers and renters.” I like digestible insights.