Boston Fed, Report: House Prices and Rents in the 21st Century

“The results in this paper highlight the need to incorporate data on prices of both owner- and renter-occupied properties and rents in any analysis of potential overvaluation in the housing market. As we have shown, without data on the price of renter-occupied properties, one cannot construct a meaningful price-rent ratio, which may result in mistaking an increase in the price-price ratio for an increase in the price-rent ratio or vice versa.”

“Since Case and Shiller (1987), consistent, robust house price indices have become widely available and widely used. However, market-based rent indices have emerged only more recently with the Zillow Observed Rent Index (ZORI) and the CoreLogic Single-Family Rent Index (SFRI). To date, though, the only price indices available for renter-occupied property are for multifamily properties, which are not directly comparable to the owner-occupied housing stock.”