trulia's rent vs. buy index - q1 2011
DESCRIPTION
According to Trulia's Q1 2011 Rent vs. Buy Index, 72% of American's 50 largest U.S. cities are locations where it is more affordable to rent than to buy a two-bedroom apartment, condo and townhouse. To learn more about the findings, click through the slide show. To check out a cool interactive graph illustrating the Index's findings, click on: http://trulia.movity.com/rentvsbuyTRANSCRIPT
TRULIA’S RENT VS. BUY INDEXJANUARY 2011
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Key Findings
• The ‘Great Recession’ created a nation of renters were more Americans have found themselves tenants – either by choice or by necessity.
• Following the principals of supply and demand, renting has become relatively more expensive while homeownership has become relatively more affordable.
Key Findings
Key Findings
Contributing Factors
• Cities overwhelmed by foreclosures and unemployment – including many cities in Florida, Arizona, Nevada and Central California – typically correspond to more affordable markets for prospective buyers.
• Close proximity to economic centers with promising job growth projections have propped up both the demand for homes and costs of homeownership in cities such as San Francisco, Los Angeles and Oakland.
Extras
• INTERACTIVE RENT VS. BUY MAPCheck out Trulia’s new interactive rent vs. buy map to see the differences between renting for a year and buying a similar two-bedroom apartment, condo or townhouse in America’s 50 largest cities. http://trulia.movity.com/rentvsbuy
• RENT VS. BUY CALCULATORCompare the costs of owning versus renting a home with Trulia’s rent vs. buy calculator to see which option may be a better fit for your financial needs. http://www.trulia.com/mortgage-calculators/06/rent-or-buy/
Methodology
Trulia calculates the price-to-rent ratio for the 50 largest U.S. cities using the median list price compared with the median rent on two-bedroom apartments, condominiums and townhomes listed on Trulia.com.
Sample Price-to-Rent Ratio Calculation:– Median List Price: $140,201.37– Median Rent: $1,871.65– Price-to-rent ratio: $140,201.37 ÷ ($1,871.65 x 12) = 6
Interpretation Key:– Price-to-Rent Ratio of 1-15: Owning a home is much less expensive than renting in this city.– Price-to-Rent Ratio of 16-20: The total costs of homeownership in this city are greater than
the costs of renting, but it might still make financial sense to buy depending on the situation.– Price-to-Rent Ratio of 21+: Renting in this city is much less expensive than owning a home.
Definitions:– Total costs of homeownership 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. It also includes 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.