Can the BH&J Buy vs. Rent Index Anticipate Housing Price Movements?
This paper investigates whether and to what extent the Beracha, Hardin, and Johnson Buy vs. Rent Index (BH&J Index) is able to anticipate future housing price movements. The BH&J Index is based on a model introduced by Beracha and Johnson (2012) in which a low index value is associated with a buy recommendation and a high index value is associated with a rent recommendation. The results of our analysis reveal a negative relation between the BH&J Index value and future housing price changes at the metropolitan level, which is consistent with the buy or rent recommendation of the index. The negative relation between the BH&J Index value and future housing price changes is statistically significant, economically meaningful, and is particularly relevant for medium-term holding periods.
Journal of Housing Research
Taylor & Francis Ltd.
College of Business and Management
Johnson, K. H., Beracha, E., & Feng, W. (2020, October 16). Can the BH&J buy vs. rent index anticipate housing price movements? Journal of Housing Research, 29(1), 20–33. https://doi.org/10.1080/10527001.2020.1831827