It’s cheaper to buy than rent in 72 percent of major U.S. cities, according to a study released today by Trulia.
The real estate search site found that it’s more affordable to buy a two-bedroom home than rent one, but many have decided to rent rather than buy due to economic uncertainties.
“Following the principles of supply and demand, renting has become relatively more expensive than buying in most markets,” said Pete Flint, CEO and co-founder of Trulia, in a release.
“Though necessary for achieving true economic recovery, stricter bank lending practices have also further aggravated the struggling housing market in the short term. Even highly-qualified homebuyers face intense scrutiny on their income, savings, existing debt and credit history before they can get a mortgage loan.”
The hard-hit cities of Miami and Las Vegas are the best cities to buy vs. rent, per Trulia’s Price-to-Rent Ratio Calculation, which takes the median list price and divides it by 12 months of the median rent for the area.
A price-to-rent ratio of 1-15 means owning a home is much cheaper than renting one, while 16+ means it’s more expensive to buy, but could make sense if future home price appreciation is realized.
However, even areas where unemployment and foreclosure filings run rampant aren’t ripe for buyers, as Los Angeles and Oakland made the top 10 cities to rent vs. buy.
Trulia attributed this to “promising job growth projections” in these areas, as both are in close proximity to economic centers.
Prospective homebuyers should remember that renting has its conveniences, including less upkeep and the ability to rent month-to-month, without the worry of home price depreciation and qualifying for a mortgage.
So it’s not necessarily a “good time to buy” in these cities either.