Making the buy vs. rent decision
Posted by Super Admin on Wednesday, September 2nd, 2009 at 9:34am.To determine whether it makes more sense to rent or buy in the current economic climate, experts encourage people to examine the price-to-rent ratio, or the average cost of purchasing a house divided by a year’s worth of rent payments.
The ratio reached 24.7 in 2005, according to Economy.com, meaning that individuals could spend 24.7 years in a rental for what it would cost to buy a house. The ratio has fallen to 17.4, and Economy.com notes that the historical average since 1986 is 16.5.
While some believe falling house prices make homeownership a better choice right now, an Economy.com analysis of the price-to-rent ratios in 54 metropolitan areas shows that renting is a better deal than homeownership in 21 cities. Some of the so-called “renter –friendly” cities are Portland, Ore., Baltimore, Raleigh, Charlotte, Salt Lake City, San Antonio, Trenton, Philadelphia, Honolulu, and Seattle.
Center for Economic and Policy Research Co-Director Dean Baker says the price-to-rent ratio should not be the only consideration. People weighing whether to rent or buy also should consider that renting makes more sense if they plan to move in a couple of years, and renting allows them to live in neighborhoods where homeownership might be too costly. Additionally, they do not have to perform maintenance tasks if they live in a rental.
Print
ShareBe the first to comment on this blog entry!
Leave a Comment
- Featured Properties
- Recent Blog Posts
-
Homebuyer tax credit best tool for sustaining housing recovery
The best tool for sustaining the still-fragile housing market is the $8,000 homebuyer tax credit, and it’s essen... Read MoreForeclosure doesn't always mean a good deal
Buyers seeking a foreclosed property should realize that not every foreclosure is a good deal.Urge would-be buyers of... Read MoreMaking the buy vs. rent decision
To determine whether it makes more sense to rent or buy in the current economic climate, experts encourage people to e... Read More
