Posted on Wednesday, October 13, 2010
With top lenders like Bank of America and PNC issuing far-reaching moratoriums on foreclosures, now may just be a better time to rent than buy.
A simple calculation called the price-to-rent ratio can give you an indication of whether it's a better move to rent or buy a home. Trulia, the online real estate data provider, evaluated the price-to-rent ratio in the 50 largest U.S. cities by population. By comparing the average purchase price of a 2-bedroom home -- including mortgage fees and maintenance expenses -- with the average rental price for 2 bedroom apartments, condos, and townhouses, Truilia came up with a handy, back-of-the-envelope way to gauge a local market. Cities with price-to-rent ratios between 16 and 20 indicate that it is cheaper to rent than purchase a home, but certain financial situations may make ownership a viable option. In cities with price-to-rent ratios of 21 and above, it is much more expensive to buy than rent.
Check out Truila's latest list of U.S. cities in which it's cheaper to rent than buy a home: