Home values continue to take it on the chin. The latest update of the S&P/Case-Shiller
home price index
for 20 large metro areas says values fell 3.3 percent over
the 12 months through February. Not great for homeowners to be sure, but soft
home prices are in fact creating an interesting conundrum for renters
New data from real estate research firm Trulia says buying
rather than renting, is now a far better financial
deal in about 80 percent
of the largest cities.
There's no guarantee when housing will finally
bottom, but four plus years into the reset, we're much closer to the end than
the beginning. If you've got your eye on ownership and live in an area where
renting isn't a roaring deal, maybe it's time to start sniffing around the open
houses. That is, if you think you'll be able to scale today's tougher
mortgage lending standards
is the Best Deal
Trulia calculates a rent-vs.-buy ratio by comparing
the median list price of homes in the 50 largest cities with the median rent for
condos, and town homes. A ratio below 15 means buying is much less expensive
than renting, after accounting for the total costs of home ownership. According
to Trulia's second-quarter data run, buying is the better financial deal than
renting in 39 of the 50 cities. No surprise, markets with a large foreclosure
inventory (and thus soft prices) such as Las Vegas, Phoenix, and Miami top the
list of cities where buying beats renting by the widest
margin.The Top 10 Cities Where Owning
Las Vegas (rent-vs.-buy ratio = 6)2.
Phoenix (7)3. Arlington,
TX (7)4. Fresno (8)5.
Miami (8)6. Mesa, AZ
(8)7. Jacksonville, FL
(98. Sacramento (9)9.
Detroit (10)10 . Omaha
Looking at the other
end of the spectrum, Trulia considers any score above 21 a screaming signal that
renting is a better deal. A score between 16-20 is a squishier call where other
considerations besides straight-up financial ratios can tip you one way or the
other.The Top 10 Cities Where Renting Can Make More
Sense1. New York City (rent-vs-buy
ratio=39)2. Fort Worth, TX
(30)3. Kansas City
(22)4. Los Angeles
(20)5. Memphis (20)6.
Seattle (19)7. Boston
(19)8. San Francisco
(199. Portland, OR
(18)10. Oklahoma City (16)
You can check out
rent and list-price data for all 50 markets by clicking through to the Trulia
map, below.Rents on the Rise
It's not just
slumping home prices that are skewing the rent-vs-buy calculus toward buying in
most markets. Landlords are increasingly able to raise rents in more markets,
making renting less of a good financial deal. According to Reis Inc, which
tracks rental data across 82 markets, rates rose in the first quarter in 79 of
Below are Reis forecasts of where
rental increases will be highest and lowest for the entire
year:Where Rents Will Rise the Most in
20111. San Jose 8.1
percent2. Washington, D.C.
6.93. Suburban Virginia
6.44. Seattle 6.35.
New York City 6.16.
Oakland, CA 6.0 7. Fort
Worth 6.08. Orange Cty, CA
5.69. Houston 5.410.
Ft. Lauderdale 5.4
If you happen to live in
New York City, Seattle, or Fort Worth take note. While Trulia data suggest
renting has the upper hand right now, the Reis data implies that you still might
need to steel yourself for some stiff rental increases.Where
Rents Will Rise the Least in 20111.
Las Vegas 1.2 percent2.
Orlando 1.4 3. Wichita
1.6 4. Syracuse 1.65.
Jacksonville 1.86. Los
Angeles 1.97. Lexington, KY
2.28. Columbus, OH
2.39. New Haven, CT
While Las Vegas ranks as the best market in
terms of buy v. rent, it's not as if renters have to worry about rising rents
this year.Lon Mapes - Redlands Broker/Owner &
Multimillion Dollar Sales Producer
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