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By Rudy Bachraty | Other/Just Looking in Fort Collins, CO

New Trulia Real Estate Index: Rent vs. Buy

Dollars !
Creative Commons License photo credit: pfala

Today Trulia announced America’s Top 10 Cities to Buy vs. Rent and the Top 10 Cities to Rent vs Buy.  Trulia calculated the price-to-rent ratio using the average list price compared with average rent on 2 bedroom apartments, condos and townhomes listed on Trulia.com. To create the list, Trulia analyzed the largest 50 cities in America, by population.

Top 10 Cities to Buy vs. Rent

City Price-to-Rent Ratio
1. Minneapolis, Minnesota 8
2. Arlington, Texas 8
3. Miami, Florida 8
4. Fresno, California 8
5. San Antonio, Texas 8
6. Mesa, Arizona 9
7. Jacksonville, Florida 9
8. Phoenix, Arizona 10
9. El Paso, Texas 10
10. Las Vegas, Nevada 11

“At the peak of the real estate bubble, cities like Miami, Phoenix and Las Vegas were not affordable for many. Now the opposite is true,” said Pete Flint, co-founder and CEO of Trulia. “Home sellers in these hard hit areas are forced to lower their prices to compete with all the foreclosures on the market. As a result , these unattainable markets are so affordable it makes better financial sense to buy than rent.”

Top 10 Cities to Rent vs. Buy

City Price-to-Rent Ratio
1. New York, New York 33
2. Omaha, Nebraska 26
3. Seattle, Washington 25
4. Portland, Oregon 22
5. San Francisco, California 22
6. Oklahoma City, Oklahoma 21
7. Kansas City, Missouri 20
8. San Diego, California 20
9. Cleveland, Ohio 20
10. Dallas, Texas 19

“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, “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.”

To see the Top 50 City Rent v Buy Index, please click here to download.

Trulia.com’s Rent vs. Buy Index - Interpretation Key

Price-to-Rent Ratio of 1-15: It is much less expensive to own than to rent a home in this city Price-to-Rent Ratio of 16-20: It is more expensive to own a home in this city are 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.

Definitions: Total costs of home ownership include mortgage principal and interest, property taxes, hazard insurance, closing costs at time of purchase and ongoing HOA dues and private mortgage insurance, where applicable. Total costs of homeownership include an offset for the tax advantages of homeownership, including mortgage interest, property tax and closing cost deductions.

Total costs of renting include rent and renter’s insurance.

Comments

By J-dubbs,  Thu Jun 3 2010, 16:46
I think one aspect that was forgotten was the time spent in the home. Buying a home and selling after 1 year, probably would make renting a whole lot cheaper. But after 3-5 years, buying becomes the cheaper solution. Also it doesn't seem the calculation took into account home value rising over the period and renting rates rising over time.

An adaptation to this study would be measuring how long one would have to own a home in each of the cities to make it worth owning over renting.
By Gita Bantwal ABR/CRS/SRES/CDPE,  Sat Jun 5 2010, 05:52
I will check out the link and see where they have ranked Philadelphia. I agree with the above comment that it will depend on how long they plan to live in the house .
By Tom Robinson,  Sun Jun 6 2010, 17:45
Very interesting statistics that are likely to change over time. If you are planning to stay anywhere for any length of time (nowadays about 5+ years) you are better off buying than renting. Next year the list of cities will likely change just like it was noted that Miami was unaffordable to buy just a few years ago.
By Marianne Bandy,  Sun Jun 6 2010, 19:12
This is interesting, although using average list price can be misleading. In large cities, prices can vary a lot by area and neighborhood, making comparisons difficult for a renter that doesn't know how their rental price range will compare.
By Ddaniel,  Mon Jun 7 2010, 08:23
If it costs the same or more a month to own than to rent. then renting is better because of flexability and lack of liability. also you won't loose money in cost to repair and fix the money pit. All this owning is better is a crock. because it is more socially accepted that you're better off as an owner ( the big lie). But try and have a happy relationship with the nesting woman, who has been told all her life that owning a home is the only path to true happiness. How's is that fantasy working out Ladys?? To make a blanket stament that owning is better than renting is foolish. Owning is just more socially accepted. herd mentallity is lame look at the numbers and think for yourselfs. But it really is all about emotion. Fact is if you finance most of your house purchase you're buying it twice paying double, where is the deal in that?
By Michael Walker,  Wed Jun 9 2010, 11:54
Keep in mind that paying rent is ultimately helping the landlord and not yourself. Sure over a 30 year term there is a lot of interest going to the bank ... But with a rent payment 100% of that does you exactly 0 good with regards to gaining equity which turns into wealth.

That being said, if you are unsure if you'll stay in a particular area owning isn't the way to go.
By Carl Mcguire,  Thu Jun 10 2010, 05:40
I doubt that the tax deduction for ownership was factored in, which is a key ingredient when making the buy verses rent equation.
By Scott Miller - REALTOR®,  Tue Jun 15 2010, 04:36
This is a great feature to have at Trulia. As long as the numbers are close to 100% accurate, buyers and renters will be able to make much more informed decisions. Trulia should clear up some of the questions that are posted here (tax deductions, years in home, etc.) so that this information can be used properly. Definitely a good feature to have here, like I said!
By Karen Berg,  Tue Jun 15 2010, 04:53
I sure would like to see a definition of the number/ratio means! The number 11 in Vegas and 19 in Dallas don't seem to be THAT far apart!
By Pat O'Reilly,  Tue Jun 15 2010, 05:00
I question where you are getting your numbers. I work the Dallas Fort Worth Area and the average price looks very high. There are areas of Dallas and Fort Worth where the average price may be over $250,000 but there are hundreds of homes for sale below $150,000. I am closing on a duplex and a townhome both below $80,000 in the next 30 days.
By Marcia Gelfand,  Tue Jun 15 2010, 05:16
This is a respone to DDaniels comment that owning a home and renting cost the same. Who have you been talking to?? It is cheaper to own a home. I am paying $350 a month less for both my mortgage and insurance than I was paying to rent. The landlord was the only one who made out when I rented. Now at least I have equity. And, by the way, rents can go up year after year at the Landlords will.
By Timothy M. Garrity,  Tue Jun 15 2010, 05:19
Interesting.
By Lori Mattice,  Tue Jun 15 2010, 05:22
Well my two cities that I am inbetween - Milwaukee and Chicago didn't make it on the list. But I can tell, that buying around here is definetely the way to go right now, there is not much for rent here, and because of that, rent is higher than normal.
By Loriann M. Harrison,  Tue Jun 15 2010, 05:36
Great info. Thanks for sharing.
By Vivian Olkin,  Tue Jun 15 2010, 05:56
The question of whether to buy vs rent isn't just a question of money. There is pleasure in owning your space, to do with it what you will. Paint the colors you want, remove a wall, change the counters, make it yours. You don't need to ask the landlord for permission to plant a garden, blah blah blah. Owning a home, while financial is also emotional. That said, I never recommend buying if the circumstances aren't right.
By Chris Tesch,  Tue Jun 15 2010, 06:00
I have a lot of issues with this whole calculation in the first place especially the fact that I could probably find plenty of apartments I wouldn't set foot in that are comparables for buying. My son recently bought a house in Dallas, one of the areas that it is perportedly cheaper to rent than buy. He went FHA with minimal down. His payment is less than $900 a month. Apartments they were in that were half the size were $850 a month and crime was higher around the apartments as well. Calculating in the GPS that was stolen and various other items that "walked off" on their porch I bet they will be much better off owning and their house will eventually appreciate. He does now have a neighbor that has rented the house next door for 25 years. It would be paid off by then. No factor for that rent vs. buying was taken into account I assume.
By Evelyne Hunt,  Tue Jun 15 2010, 06:05
I like all of your comments guys. However, in the end, it's a matter of preference and peace of mind. No fixing or maintenance to worry about!
By Allan Reid,  Tue Jun 15 2010, 06:12
The social benefit of home ownership is that housing standards improve. People look after what they own, and take pleasure in defining some part of their character in their property. Folks who rent, trash one, move to the next. Go into the inner cities; rental properties are identifiable by how distressed they look. Landlords do not rent to make the places look good, they typically rent to pay a mortgage. Someone owns what is being rented. Private ownership is saying you want to be part of a society, for better or worse.
Its very similar to marriage and living together.
By Allan Reid,  Tue Jun 15 2010, 06:13
What happened to South Carolina?
By Jim Norbuta, Realtor®,  Tue Jun 15 2010, 06:23
Recently, a young couple planning their wedding in August inquired about a small condo that was for sale. In our area, condo values had been relatively flat before our economic woes, and have dropped significantly since then. While it may good a good time to purchase a condo, it's only the case if you are planning to stay a minimum of 4-5 years. Our analysis reflected a minimum 12 1/2 % cost to buy and sell, that in this case would amount to $230/month over 5 years. While initially this may not look very good, what's the value of living in a condo versus a rental apartment ? Approximately $150/month will be saved on federal income tax. You can also make the argument for the condo market being at or near bottom. This particular unit did not have a first floor master, which would have improved it's market time for re-sale.
By Bradley Klimaszewski,  Tue Jun 15 2010, 07:07
When renting you are still buying a home, you are just buying it for the landlord. Rent payments typically cover debt service, insurance, taxes, maintenance and profit. I do agree that time if the factor, if you are not going to stay in a home more than 1-2 years it is cheaper to rent
By Ronald Jeanniton,  Tue Jun 15 2010, 07:08
Miami STILL is not affordable for many. This is a national comparison, can't take these numbers seriously as these metrics are too general in nature.
By Sue Cortes,  Tue Jun 15 2010, 07:17
Interesting feedback from everyone and as one of you pointed out, it is a matter of preference and may I add the circumstances that support the decision when the decision is made. As a landlord myself, I take care of my rental (not just for the rent) but because I wanted to attract tenants who are willing to stay for a long time and take care of the property as if it belongs to them. San Francisco is still an expensive area to own a home and renting a place that is nice may not be a bad decision after all for those who do not have the 3.5% down payment that FHA requires.
By Jeffrey White,  Tue Jun 15 2010, 07:17
This report really isn't that helpful at all for a few reasons. First of all it cannot be that accurate when it is based off of listing prices, which in some markets are wildly different than the actual sales that are occuring, especially in the past few years. Secondly, as a few of you have mentioned, the real reason to buy is when you settle down and decide to become a permenant part of your community. You buy in this case because over the years you will build wealth. It's pretty simple. Owning a home is a LONG TERM investment. Everyone forgot about this in the bubble. It is foolish to purchase without the understanding that you must keep the investment for x amont of time for it to be a financially beneficial situation. to find out this x number in each city would take a muh more detailed analysis of owning over long periods of time with data from sales and rental statistics that are 100% sale prices, not listing prices.

Real estate goes up and down, but mostly up. Anyone who thinks renting is better than buying over say a 20 year period is clearly dilusional. Even in this ridiculous mess we are in, the people who purchased a home in 1990 are way better off than those who rented because they developed equity. This is an overwealming truth accross the board as long as they kept the equity instead of pulling it out and spending it, that is.
By Gordon Cuffe,  Tue Jun 15 2010, 07:23
After seeing my house value drop by 50% in the last three years, it is the first time in my life where I wish I was renting. The market collapse has been horible thanks to the brilliant people who invented 1% teaser rates and no income qualifying loans. If you must buy a house in Sacramento, then go to http://www.rocklinsacramento.com to search for homes for sale.
By Maggie Weissman,  Tue Jun 15 2010, 07:41
Looking at Portland and Seattle, the high purchase price doesn't make sense with such low rental prices. A property owner couldn't afford to rent. Surely these comparisons are apples to oranges--i.e. not comparables.
By Robert La Bianca,  Tue Jun 15 2010, 08:05
What about Palm Springs Ca "rent or buy"
By Irma Klenk ABR, I.R.E.S SFR.,  Tue Jun 15 2010, 08:10
I believe that your statistics of renting vs buying created a good argument for a question in a lot of people's mind. I lived overseas for many years renting, sometimes in countries were you have to be a citizen in order to own property, I have owned my home for a few years now and I have never felt more grounded secure and proud. There is more than equity benefits when you own a home... In Sugar Land Texas Life Is Sweet !
By Ellie Viray,  Tue Jun 15 2010, 08:23
Interesting info. I'm with Michael on the fact that at the end, renting is paying the landlord. I rented for a while and ended up paying close to $100,000 to my landlord! So, what do you think abou that?
By Elisha La Croix,  Tue Jun 15 2010, 09:13
This is definitely a FACT for the San Francisco Real Estate Market! It's hard to believe how expensive it is to buy a home there. Even a rental is pricey. We must consider that the cost of living is more, and they pay more on average. So, if you're a homeowner in the bay area, lucky you!!
By Lisa Hatfield,  Tue Jun 15 2010, 09:24
I am guessing that Ddaniel has never owned a home. And I have to disagree with his "herd mentally" comment..actually most all of his comment.
I have a 20 yr old daughter that bought her first house last year at the age of 19. She established her credit as soon as she turned 18. When the first time home buyer credit came out, I suggested she find out what she would qualify for. She was spending $550 a month on an extremely small 2/1 apt. She qualified for $83K USDA Rural Development loan-no money down and no PMI and 5.25% interest rate. I found her a good deal of a home for less than she qualified for. $77K for a 2/2 on almost an acre of land inside the city limits. The sellers paid her closing costs and repair costs. It appraised for $105,000 (note it would not have sold for $105,000 in the condition it was in and the sellers were not going to fix it up to sell it--as is condition, mostly cosmetic--but as Realtors know if it looks bad and smells bad--it isn't going to sell at full appraisal value). She and I remodeled both baths ourselves (tile, toilet, new vanities), installed new appliances and carpet. It will now sell for $105,000 easily. She has to stay in it for 2 more years and then she will sell it and take the $25,000 in equity and buy another fixer upper and make that money grow. Oh and note she also has a home warranty for all of those nasty repair costs too.
So I say she is in much better shape financially than any renter would be...
Another note: my husband is also a Realtor--he only handles property management, so I am not against renting at all.
By Glen Mitchell,  Tue Jun 15 2010, 09:26
In addition to items mentioned such as tax savings numbers are worthless without exploring where they have been. Historically a 22 price to rent ratio in San Francisco may be low implying a good time to buy if it reverts back to its average. There are a lot of reasons people would rather live in San francisco area than Fresno. So there should be a rent premium. Without more details, the numbers are just numbers. Fun to look at and interesting but by themselves really not worth much.
By Glenna Tanner,  Tue Jun 15 2010, 09:28
This is a very limited study and only compares renting vs. owning a 2 bedroom apt/condo/townhome in each city. I'm in the Portland, Oregon market and most of my clients, and the Realtors I work with, are looking for houses with a minimum of 3 bedrooms. I also have to wonder where they got their pricing info. The price of the average two bedroom apt/condo/townhouse in the report is stated as $307,858. Last month the average Portland home price (all homes) was $280,300 with the median home price (all homes) being $238,900. The results of a report is only as good as the information.
By Chet,  Tue Jun 15 2010, 09:35
The correct way to calculate is the average rent compared to the average sold price times the average interest rate for 30 years divided by 12 months. Then you factor in the tax deductions per year, property taxes and interest paid.
That data is what I really would like to see.
By Mike Satterlee,  Tue Jun 15 2010, 09:36
The areas rated as Rent vs. Buy are also the areas that historically have the highes rate of appreciation - that is, at least when homes are actually appreciating.
By Kevin Hunt,  Tue Jun 15 2010, 10:06
By Kevin Hunt John L. Scott Real Estate Redmond,WA.

In my opinion it is almost always better to buy vs. rent in any area due to tax advantages. The exception would be a bubble, overprised market which has come and gone. Even if the home does not appreciate a dime, you have an asset that you can borrow against as you build equity, you have peace of mind in home ownership, you have tax advantages, and you could rent it out at some point. I have been in busines over 23 yrs. and have never seen a better affordability index. BTW appreciation with return at some point.
By Tara-Nicholle Nelson,  Tue Jun 15 2010, 10:07
Thanks to all for your participation in this dialogue. To clarify a few points, the index was not intended to be the ultimate decision metric for any individual person on their own personal rent vs. buy decision, nor did it include futuristic projections like appreciation or the inevitable increase in rents charged to tenants (compared with the largely fixed housing payments associated with a fixed rate mortgage, for homeowners who select that sort of financing).

The index is a snapshot in time that compares the financial costs of ownership vs. the costs of renting - at the time of the data analyzed - in the various cities. There are a multitude of very valid reasons someone might buy even when it's cheaper to rent, or might choose to rent, even when it's cheaper to buy. Some people simply prefer the equity-building potential, stability and ability to customize their homes inherent in ownership, and others like the flexibility and ability to move quickly and freely that comes with renting.

Also, the index only analyzes a fairly narrow subset of properties - 2 bedroom condos, apartments and townhomes. Because there is such a disparity in the numbers of rental listings when compared to for sale listings of single family homes and larger properties, we chose a subset where we could really compare apples-to-apples. And, to Jeffrey's point, it only looks at listing prices - both on the for rent and for sale side.

The goal here was to illustrate for those housing consumers who are carefully considering whether to rent or to buy one tool they can use to analyze the cost element of the financial comparison. The price-to-rent ratio method can actually be used fairly easily by individual consumers comparing a particular rental home to a particular home for sale - we'll be showing you how in the coming months.
By Lenderchris,  Tue Jun 15 2010, 10:11
To buy or rent . . . that is the question? Shakespeare did not mention buying or renting, but he did say to be or not to be . . . that is the question . . ." To be a homeowner or not to be a homeowner . . . to be a renter or not to be a renter . . . that is the [modern] question. Its a matter of personal preference, tax liability (does one need the write-offs associated with homeownership?), short-term and long-term goals. My mom just sold her house which she owes $150K and will net about $250k even in a down market. If she was renting she would not have this option. On the other hand, if you rented something for $1500 a month, when the price to buy would make payments $3000 and you saved the difference, if rents did not move much you would have $18,000 per year. Over time, with compounding interest that could grow substantially. I personally believe in the long-term its always a good idea to own real estate. With the insecurity of long-term social security benefits, pensions, etc. Owning real estate, long-term can create positive cashflow for the homeowner, especially when the own multiple properties as an investment. Should everyone own a home, no. But, everyone should do the math and see what makes the most sense for them both short-to-long-term and consulting a tax professional along the way.
By John Pettas,  Tue Jun 15 2010, 10:43
We all wish we had the proverbial "Chrystal Ball", but statistics don't always tell the story. Home ownership for years has been about long term goals and investments. I agree with a lot of comments above; ie it's more than one number. A person has to look at interest rates, overall strength of their market, how long they plan on staying, etc. It has been proven that over time, real estate has is a sound investment.
By D. Mathews,  Tue Jun 15 2010, 11:43
Real Estate is still and always will be the number one investment choice, for building long term wealth and financial security. Owning a home is a personal lifestyle choice-a place to build lasting memories. If you can afford to own the home you wish to buy-then buy it! Renting is for fools and always will be no matter what criteria or analysis you may wish to use.
By Karen Hunt 206-850-2041,  Tue Jun 15 2010, 12:36
It's an interesting model. Here's another from the NY Times: http://www.nytimes.com/interactive/business/buy-rent-calculator.html
It breaks it down more comprehensively, concluding that if you are planning on staying in a home 6 years or more it is cheaper to buy than rent by $124 a year. Yes, it's all about what kind of lifestyle choice you are making, i.e. family, pets, gardening, designing and creating your own environment vs. just a place to sleep at night or choosing to travel.
It's a great time time to buy if you can. Interest rates have been at record lows--15-yr. loans the lowest in 2 decades!-- the end of May because of European investors buying up US bonds and driving mortgage rates down. Here in Seattle proper, the Eastside and North King Co. prices are rising year over year 5.3%, 1.2% and 6.4% respectively. South King county went down in values.
Prices are staying low, sellers are getting more realistic about needing to be priced low and more foreclosures are coming on the market which will also keep prices low month over month. So yes, it's all local. I don't think a blanket statement can be made about an entire city's rent vs. buy status, IMHO. And if listing prices are used instead of selling prices those aren't even comps. They haven't sold.
By Vernalie Panchame,  Tue Jun 15 2010, 14:11
I live 15minutes from NYC, in Queens. Bought my Coop apartment 5 yrs ago, almost paid off already. My mortgage + Maintenance monthly is less than a rent for the same sized apartment. This doesn't factor in year end Maintenance 45%deduction and interest on mortgage deduction (which makes it CHEAPER than renting) In about 2yrs. I will only have slightly over $1000 a month (factor in increase) maintenance and no mortgage payment!!! Where do you beat that in NYC or outer boroughs??? for a 3 bedroom, two bath???
Sorry, I love Trulia but this article is off target.
By Lazaro Madrid,  Tue Jun 15 2010, 14:54
Here in southern California buying is a lot chiper than renting; I am renting a couple 4 bedrooms, 2 bathrooms houses for $2,500 and if anyone can buy the same houses and their payment will be around $2,476 including tax, hazzard insurance and MI
By Steve Wagner, 630-433-6646,  Tue Jun 15 2010, 15:08
Well, you have to start somewhere so I applaud that initiative. However, there are some issues whch should be addressed including length of stay which has been brought up. Additionally, I would point out a couple of thoughts. First, seldom is it the case that properties sell for list price so a "discount" should probably be applied. Second, it is patently wrong to include mortgage principal as a "cost" of ownership. It is certainly a cash flow issue, but never a cost. On the other side of the ledger, there are probably some homeownership costs missing which are not covered by the HOA fees. I have done this analysis for Dupage County in the Chicago area and can confidently conclude that the cost of ownership is about 20 - 30% less on an after-tax basis compared to renting a similar property. The cash flow tends to be pretty similar, but tax deductions and subtracting out principal shows that cost is clearly lower. If a home buyer wants to maximize the savings and can stand the cash flow, they can buy at a higher price. Alternatively, they can set cash flow equal to comparable rent and buy at a lower price wih concurrent lower savings (not lower on a % basis, but a lower amount).
By David L. Mason,  Tue Jun 15 2010, 16:03
As always, when it comes to aggregate data, it makes for interesting conversation, and for a very broad economic picture of an area, it has some value. Each prospect's decision, however, should be made on specific properties in specific areas taking into account specific costs when it comes to "rent vs. buy" evaluations. Real estate is still a very localized phenomenon, due to the existing inventory and perceived desirability of any given locale. One can often find either rental "deals" or purchase "deals" that defy any sort of aggregate trend. Long term, however, one rule always applies: As long as the population is growing, and the money supply inflating, the land is finite and tends to deliver greater value the longer it is owned. Rent is always an expense and carries no value for the future.
By Heidi Hornick,  Tue Jun 15 2010, 17:19
I thought something seemed odd about Omaha being on the "rent" side. I checked it out and there is a major difference in list and sold prices. I think the list is about $210,000 and the actual is about $143,000. Omaha was a little cheaper a couple years back, but not by much.

That would be another reason to buy. Their homes are appreciating and unemployment rates aren't bad.

I'm an agent in Knoxville and Omaha and my city are very similar so that's why I caught it. One step below NY, NY? No, I don't think so.
By Karen A Burr,  Tue Jun 15 2010, 19:20
I usually advise my clients that they will always pay a mortgage, it will either be theirs or their landlords. If they have the down payment and if the mortgage ends up being about what it costs to rent, then in the long run they will be further ahead to be paying their own mortgage. Especially given the current prices and interest rates. I the Inland Empire in Southern California you will spend around $1500 to $1800 for a small 3 bedroom house and that is very close to what they would be paying on a mortgage. When you consider the tax breaks for home ownership, you are likely further ahead.
By Erik Hitzelberger - Realtor,  Tue Jun 15 2010, 21:35
I like the attempt, but fear the results are misleading especially at first glance. First, the 2-bedroom assumption is very limiting. Second, rents on an apartment in Louisville are vastly different than rents on a house (2BR or otherwise). Only house rental rates should be used for an apples to apples comparison. Third, how were the closing costs handled? If ownership was only considered for one year, than these costs have a very significant effect on the overall cost. Fourth, no appreciation/depreciation is considered. Admittedly, this is a non-existent factor for 1-2 years.. But, after 6-7 years, most home values in Louisville will increase. Finally, rental rates increase year-over-year. Fixed mortgages do not.
By Deryk Harper,  Tue Jun 15 2010, 22:39
Thanks to all those that have posted their informative and thought provoking comments. It is great to have a forum like this to share ideas and opinions. I always learn so much and value the diversity of experiences on these threads.

Quick two cents worth from someone on both sides of the fence. I own a property management brokerage and my wife and I own a few rental properties in the metro Atlanta area. I am also an associate broker with Keller Williams Realty and we help clients list and sell properties through that affiliation.

One thing I have noticed about tenants and owners in the past year or so is that A LOT more people are moving from place to place, and even in and out of the country on short term one to three year work contracts due to changing global work environments. For this type of transient contract worker it makes more sense to rent vs buy the majority of the time. They need the ability to pick up and move quickly without worrying about how to deal with an asset like a home from halfway around the world. Owners that are in this group are finding out they can't quickly sell their homes and many are reluctantly leasing them out as they move to another location and that usually forces them to become tenants in their new location as well. Work may not bring them back to the area where they own their home so that presents an issue that is often difficult to manage. Tenants that have employment contracts that move them from one place to another in short periods of time normally cannot recoup the cost of ownership over that short time frame and are usually better off leasing.

Here in my market is is easy to see that, currently, at least short term leasing is more cost efficient than ownership over the same period of time. Properties are leasing ( factoring in lease commissions and management fees ) on average for about 10-20% less than total monthly outlay for ownership in this area. If you factor in tax breaks for ownership, maintenance costs, closing costs, brokerage cost of buying and selling, etc.. it still looks like leasing beats owning for short term but I definitely agree that over a longer period of time, 5 to 10 years minimum, that the benefit starts to swing back to ownership.

Current and future employment trends need to be considered carefully by anyone comparing buying vs leasing. Most people have no choice but to move where the jobs are, regardless of other circumstances.
By Aaron Mtuanwi,  Wed Jun 16 2010, 22:33
I did not see that Pride of Ownership. It gives buyers a sense of an achievement as one of the most expensive investment of their lifetime.
Great post.
By David Nuss,  Fri Jun 18 2010, 07:49
I agree with the other's commenting on the length of time one plans to live in their home. We ahve all seen how quickly markets change and while it may be better to rent in one city this year, due to the market. In three years, the reverse may be true. It has always been true that owning a home has long term benefits verses renting and old money tends to invest for the long haul in property. Why not invest our money as those who hold large sums of money do.
By Kirk Knight - REALTOR,  Sat Jun 19 2010, 19:43
Where's consideration of risk! Several of the cities noted as good locations to buy are still headed downward in value.

As others have noted, one can't directly compare $2,500 rent vs $2,500 PITI. Let's just deal with the hard numbers and leave emotions out such as pride of ownership. Income tax break favors owning. Cost of maintenance favors renting. In California property taxes are less than rate of inflation. Rents generally rise with inflation, sometimes faster if the market is tight. There is no appreciation for renters, nor is there risk of decline in property value: I've yet to hear of "an underwater renter."

The cost of sale should be left out of calculation unless the client anticipates changes in household needs, or job stability and relocation. As the study was of 2 br property, the assumption appears to be a young buyer with few or no dependents, hence the likelihood of a growing household and need to move up in size.

I've analyzed my market down to parcel blocks - some neighborhoods of executive homes turn over every 3 years due to promotion/job changes, other neighborhoods of small 2 br bungalows average 35+ years.
By Linzfern,  Mon Jun 21 2010, 16:59
is this a comparo of whats better to invest in or for retail buyers. my software http://bit.ly/cripZR crunches my numbers for me. is this for urban areas or suburban? are these numbers from median price range, low end or luxury homes? i also think your long term goals will decide which direction you will choose, as well as credit factors. thanks for such great information,
Gabriel
By Jeremy Glass,  Thu Jun 24 2010, 13:11
Good article but needs more research....ie how long you plan to live in the house, who you are living with (family, friends), and price range of home.
By Martie Lieberman: 941-724-1118,  Fri Jun 25 2010, 14:26
Great info. This business is always changing - which makes it interesting and challenging, to say the least.
By Geoffrey Schiering,  Mon Jun 28 2010, 12:42
I'm a bit more optimistic about the return of price appreciation in San Diego. Keep watching those stats for further increases. We're showing improvement every month this year.
By Donna Ferrell, Broker,  Tue Jul 6 2010, 21:04
Where is LA? No one has the love for LA :(
By Morrighu,  Fri Jul 9 2010, 11:56
What most people don't understand about buying a home in Texas in the whopping property taxes we have here. My house, which is valued at $157,000 on the tax rolls, has an annual property tax bill of about $2500 and we're not even in the city limits. It would be nearly double that if we were. That's an annual expense to the home owner that doesn't seem to be included in their calculations.
By Andreas Senie,  Fri Jul 9 2010, 13:49
It really comes down to pride in ownership and the neighborhood dynamics and taxes. Without breaking it down into towns I think the state wide statistics could be far off their mark.
By Jan Sansevera,  Sat Jul 10 2010, 10:18
It still boils down to paying YOUR mortgage vs. paying the LANDLORD's mortgage. It will always be the best investment one can make. As the stock market may crash, you have nothing left to show for it, but even if the real estate market goes down temporarily, you still have your home to show for it.
http://www.ListedByJan.com
By Helen Oliveri,  Sun Jul 11 2010, 14:36
Very interesting analysis.
By Melina Tomson,  Tue Jul 13 2010, 11:06
You know I just stumbled on this and I think this is one of many good introductory tools for people to use when they are looking at relocating. Sometimes people fail to consider costs of living and I think if you can see how rents generally compare to home ownership it will tell you a bit about the cost of living there. In that context I think this could be a useful tool.

After that it really is a matter of personal number crunching and preferences.
By Timothy M. Garrity,  Thu Jul 22 2010, 05:46
Great info. Thanks.
By Dan Parillo,  Sat Jul 24 2010, 11:38
The combination of super low mortgage interest rates and the large supply of housing for sale is an unbeatable combination. Add tax incentives like mortgage interest rate and real estate tax deductions, well, the numbers favor the buyers versus renters. Many people that think they are renters should really consider buying. Now is the time.
By Sherrie Clark,  Sat Jul 24 2010, 20:00
Low mortgage interest rates combined with the tax incentives for a person considering living in a home at least 3-5 years makes this a winning combination. Renters need to take all the factors into consideration when deciding whether to rent or buy. Now is truely the time to buy.
By Edwin Brown Subject To Investor,  Mon Jul 26 2010, 09:10
Another way to look at this info is from an investing standpoint. The lower the ratio the better the cashflow on investment property on average
By Melissa Holland,  Thu Jul 29 2010, 08:35
I agree that renting vs. buying is really a personal choice. Often we forget about the hidden costs of home ownership includidng repairs and replacement of major systems such as a roof, a heating/cooling system, etc. When these systems break down or wear out, the home owner must come up with the cash to replace them. The renter calls the landlord or the property manager. For some, renting makes more sense, particularly if the renter changes jobs frequently.
By Jenny,  Mon Aug 2 2010, 01:12
Earning money has online never been this easy and transparent. You would find great tips on how to make that dream amount every month. So go ahead and click here for more details and open floodgates to your online income. All the best.
By Cbh,  Wed Aug 4 2010, 10:42
Something to consider - that I keep noticing people don't mention, is that rent goes up every year or so. While it may be chaper this year, 5 years from now , your house payment is at today's payments yet your rent may be up 30% or more, plus you have nothing to show for it. Plus with a lot more renters going on the market- you can bet prices on rentals will go up and up!(Basic supply and demand)
By Visvam,  Fri Aug 6 2010, 11:49
I have used http://www.SkipBrokers.com to find all of my no fee apartments in NYC for the past 5 years...No fee apartments....
By Terri Decubas,  Mon Aug 9 2010, 20:45
Rent, Rent, Rent. I'm a homeowner and now a days owning a home is a big responsibility, especially if you live in South Florida. Good example, hurricane Wilma came and went and left roof damage. Made a claim against my homeowners insurance and low and behold my insurance the following term went from $1700 per year to a whopping $5800 which increased my mortgage payment from $1300 per month to about $2100 per month because my taxes and homeowners insurance are escrowed. I went into beginning stages of foreclosure because I could barely make the mortgage payment for the next year. Then, when the rates dropped they never dropped nearly close to the original $1700 I paid. Now, I am paying $3500. When you rent you dont have to worry about that responsibility. I have worked for a property management company for 4 years and could tell you numerous pro's and cons to renting verses owning. There are always good and bad to both sides but in this market renting is just as good. For one, you wont have to worry about property taxes, PMI insurance, Homeowners insurance, Flood insurance, roof repairs or major repairs. If renting in an association or apartment complex you get the benefits of a pool, tennis courts, fitness center, onsight maintenance, and someone always keeping the grounds nice. It would be nice to just come home and not have to worry about plumbing issues or having to replace a washer or dryer when you have it covered by the landlord or management company. One less stress factor.
By Dallas Homes for Sale,  Wed Aug 11 2010, 20:28
Very interesting post, it is great to read all the comments. Renting vs. buying is a big question in terms of financing however it is a lifestyle and personal choice. It is good to see that Arlington is second buy vs rent at the same time it is very interesting to see Dallas homes on the other side. Always work with a Realtor while buying your next existing home, brand new house or leasing a property in any area you choose http://www.dallashomelist.com
By Mudduck,  Sun Oct 10 2010, 17:35
wheres hartford in this mess?
By Lisarojer,  Mon Nov 8 2010, 01:56
Owners that are in this group are finding out they can't quickly sell their homes and many are reluctantly leasing them out as they move to another location and that usually forces them to become tenants in their new location as well. Work may not bring them back to the area where they own their home so that presents an issue that is often difficult to manage.Motorhome Facts+Health Insurance
By Dallasrhq,  Wed Nov 24 2010, 23:33
When renting you don't really spend much on stuff that covers that you usually spend if you own your home such as repairs and maintenance.But, for personal and family related issues it is much in great advantage to have a house of your own one you can call your own and build memories with. Anyone can have a choice to rent or buy the question is are you financially able to?
By Joy Russell,  Thu Jul 7 2011, 07:05
great blog... precisely made...

Rental homes phoenix
By Anne143,  Tue Oct 11 2011, 03:59
This is an interesting topic. You've done a very informative blog and I know you gave your very best to construct of this informative and educative article. I've enjoyed reading it. Keep up the good work. Thanks again.

GoRenter LLC
By Sun Realty - Graham Ginsberg,  Thu Nov 3 2011, 07:15
I am seriously getting so many renters calling in on my http://www.naples-fl-real-estate.com website its rediculous. Seems like nobody I know wants to buy right now. Where are the buyers?
By Dawn Boquet,  Sun Mar 4 2012, 07:15
Since this was posted... a lot has changed in San Diego... prices have come down and interests rates have also come down. I think for a lot of people it is better for them to buy vs. rent now. View all San Diego homes on the market local at
http://www.search-sandiegorealestate.com

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