Is It Cheaper To Rent Or To Buy? The Map
Top Cities Where Trulia Found That Buying Is A Value:
Las Vegas, Nev.; Miami, Fla.; Arlington, Tex.; Phoenix, Ariz.; Mesa, Ariz., and Jacksonville, Fla. In Vegas, a foreclosure rate of more than 1% has helped potential buyers by pushing bargain-price foreclosed homes on the market. Next in terms of affordability were Sacramento, Calif.; El Paso, Tex.; Fresno, Calif.; San Antonio, Tex., and Baltimore, Md.
How The Results Were Calculated.
The report used one general calculation to rank the cities: What is the average listing price of a two-bedroom home to buy divided by the average annual cost of a two-bedroom home to rent? In Baltimore, for example, Trulia’s average home listing price is around $150,000. But the average rental price is only a smidge over $1,000 a month – giving Baltimore a “12” on the rent/buy chart.
Chicago, Houston, Washington, D.C. and Philadelphia all fell into that category. Of course, there are a lot of factors to weigh when you think about renting versus owning. Since home prices are held up by jobs, if you’re buying, you should first look at the jobs picture in those markets. It’s especially good in Washington, D.C., which has an enviable 6% unemployment rate.
Cities Where Renting Is Clearly The Better Option.
Consider the most expensive cities, where the rent vs. buy ratio is strictly in favor of renting: Los Angeles, San Francisco, Memphis, Kansas City, and Seattle. New York City, meanwhile, is a hyper-expensive class of its own, with a rent/buy ratio of 31.
Why New York City Is Such A Huge Outlier.
Part of the problem, I think, is an inventory mismatch. A large share of New York City housing stock – especially in the borough of Manhattan – consists of co-op apartments that have very restrictive sublet policies. (My co-op building, for example, doesn’t allow subletting at all). If those apartments, which are generally nice, could be listed for rent, then they’d raise the average rental price – and buy vs. rent would look a whole lot better.
In other words, I think the Big Apple market is more affordable than it looks. Certainly the New York City market is stable in terms of foreclosures, which are so minimal that Trulia lists the rate as “0%.”