Buying Beats Renting in 98 of 100 Metros

 

 

Buying beats renting in 98 of 100 metros (2/12)

Buying beats renting in 98 of 100 metros (2/12). Thanks to nationwide price declines and rising rents, buying a home is now cheaper than renting one in 98 of the nation's 100 major metropolitan areas, according to a rent vs. buy index from real estate search and marketing site Trulia.

In the two remaining metros, San Francisco and Honolulu, renting often beat buying, but buying could be a better deal for those who plan to stay in their home for at least five years and take advantage of the mortgage interest tax deduction, Trulia said.

The rent vs. buy index is based on a price-to-rent ratio of asking prices to asking rents for properties on Trulia.com between Dec. 1, 2011 and Feb. 29. 2012, after adjusting for property and neighborhood attributes, the site said.

A price-to-rent ratio of 15 or below indicates it is less expensive to buy than to rent in an area; a ratio of 20 or higher indicates renting is less expensive than buying; and a ratio between 15 and 20 indicates buying could be cheaper than renting depending on individual circumstances, including tax considerations.

In the San Francisco Bay Area, San Francisco County (which is one and the same as the city) had the highest price-to-rent ratio, followed by Santa Clara and San Mateo counties, both home to Silicon Valley. In all but San Francisco County, buying was less expensive than renting.