Decide to Rent or Buy by City
Price-to-Rent Ratio of 16-20: It is more expensive to own a home in this city. The total costs of ownership of a home in this city are greater than the costs of renting, but it might still make financial sense depending on the situation.
Price-to-Rent Ratio of 21+: The total costs of owning a home in this city are much greater than the costs of renting.
At the opposite end of the spectrum is Manhattan where the rent to buy ratio at 33 favors renters. In other words, it will cost you 33 times the annual cost of renting to own a home in Manhattan, longer than it would take to pay off a 30-year mortgage.
Explains Pete Flint, co-founder of Trulia, “It is not a surprise to see cities like New York and San Francisco on the ‘Rent’ cities but I was surprised to see areas like Omaha, Oklahoma City and Kansas City on our rental list.”
That doesn’t mean those cities don’t offer great deals when it comes to buying, said Flint. “We're not suggesting that it's unwise to buy in these areas though - just that it's significantly more expensive than renting. In many of these cities, even though home buying is much more costly than renting, prices are still much lower than they have been in a long, long time.”
With federal home buying incentives gone, consumers have only local market conditions and mortgage interest rates to guide them in determining the merits of buying.
To see the Top 50 City Rent v Buy Index, please click here to download.
Blanche Evans is CEO of Evans Emedia, Inc. and publisher of The Evans Ezine. As an award-winning journalist, Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and twice recognized as one of the industry's most "Notables."
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