Dennis Norman
Last month I did an article,“Should You Rent Or Buy A Home?“,in which I discussed a survey that was done by the National Apartment Association which indicated 76 percent of consumers surveyed believed renting to be a better option than home ownership. Well,today Trulia released it’s new “Rent vs. Buy Index”which established a price-to-rent ratio for the 50 largest cities in America (by population),then,based upon that ratio,determined which cities it makes more sense (financially) to rent versus buy.
The index looks at the total cost of home ownership on a monthly basis in each city,including what the house payment would be on a 2 bedroom home at the average list price,plus the cost of property taxes,homeowners insurance,closing costs at the time of purchase,home-owners associations dues and,where applicable,private mortgage insurance. They then compared this to the average monthly rent in the same city for apartments,condominiums and town-homes,then computed the ratio between the two numbers.
The tables below first show the top ten cities to rent in vs buy,followed by the top ten to buy versus rent based upon the Trulia Index (for price/rent ratios of 1-15 it is best to buy,21 or above it is best to rent and for that 16-20 range it is still more expensive to buy than rent,but the “premium”paid for home-ownership may be worth it,depending on the consumers situation).
Source:Trulia Rent vs. Buy Index
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Related posts:
- Cities where home ownership is more affordable than rental
- Buying a home more affordable than renting in three out of four major cities
- Buying a home more affordable than renting in four out of five major cities
- Homes are affordable;Should you buy? Rent? Do home prices need to fall further?
- What to do in 2010:Rent or Buy a home?
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In this economy getting a mortgage to buy a house could be a risky purchase. Rent to buy ahome is a good alternative.
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Time tries truth.
Those numbers for Dallas look very wrong. I say this not only as an Realtor/RE investor/landlord but also from reviewing Texas A&M University Real Estate Center data.
$1300 will get you a house worth $140-$160K
$293K will rent for $2200+
Wondering how this correlates to a propensity to rent ratio.
If everyone acting in their econ best interest,in theory,there should be a correlation with more renters in places where renting makes more sense. But I wonder if this is reality.
My thinking is that in some places there is a stigma to renting,such that even when it makes more sense,those who can afford to buy do so.
Anyone have percent of households renting data handy to compare?
Great info,Dennis. I was surprised that Boston was not on the first list,but that’s what is so great about factual information (the numbers don’t lie).