As the foreclosure crisis persists and a moderate economic recovery hangs on, more Americans are asking themselves: Is it cheaper to rent or buy a home?
One real estate research site has come up with a formula to help solve that puzzle in major U.S. cities.
Trulia.com is introducing two new indices: The Top 10 Cities to Buy vs. Rent, and the reverse – The Top 10 Cities to Rent vs. Buy.
Minneapolis; Arlington, Texas; and Miami are the top areas to buy – compared to renting, while New York City, Omaha and Seattle head the cheapest to rent – versus buying.
“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.”
Trulia is taking into account the total costs of home ownership, including insurance, taxes, closing costs, private mortgage insurance and ongoing HOA dues. For renting, it considers rent and renter’s insurance.
It also assigns a “Price-to-Rent Ratio” for each city. The higher the ratio, the more expensive it is to own a home in that location.
Top 10 Cities to Buy vs. Rent
|5.||San Antonio, Texas||8|
|9.||El Paso, Texas||10|
|10.||Las Vegas, Nevada||11|
Top 10 Cities to Rent vs. Buy
|1.||New York, New York||33|
|5.||San Francisco, California||22|
|6.||Oklahoma City, Oklahoma||21|
|7.||Kansas City, Missouri||20|
|8.||San Diego, California||20|