10 Cities Where It's Cheaper to Rent
Real estate site Trulia.com today released its latest Rent vs. Buy Index, which ranks cities based on whether it's more affordable to buy or rent a home, apartment or condo. As you might have guessed (given that housing prices still are falling), it is more affordable to own a two-bedroom home in 72% of America's 50 largest cities, according to the Trulia.com index.
In particular, it is more affordable to buy rather than rent in cities where foreclosure rates are high, such as Miami and Las Vegas (see SLIDE SHOW: The 10 Biggest Foreclosure Markets). However, renting makes more sense in cities such as New York, Seattle and San Francisco.
For its index, Trulia.com used a price-to-rent ratio to determine whether it was more expensive to buy or rent in the 50 largest U.S. cities. The figure is calculated by dividing a city's median sale price by median annual rent on two-bedroom apartments, condos and townhomes listed on Trulia.com. The ratio also factors in homeownership costs, such as property taxes and insurance, and offsets for the tax advantages of homeownership.
A price-to-rent ratio of 15 or lower means that it's more affordable to own than rent. A price-to-rent ratio in the range of 16 to 20 means the cost of homeownership are more expensive than renting, but it could still make financial sense to own a home. A price-to-rent ratio of 21 or higher signifies that it is more affordable to rent.
Top 10 cities where it's more affordable to rent
1. New York, N.Y. Price/rent ratio: 31
2. Seattle, Wash. Price/rent ratio: 24
3. Kansas City, Mo. Price/rent ratio: 21
4. San Francisco, Calif. Price/rent ratio: 21
5. Memphis, Tenn. Price/rent ratio: 20
6. Los Angeles, Calif. Price/rent ratio: 20
7. Fort Worth, Tex. Price/rent ratio: 19
8. Oakland, Calif. Price/rent ratio: 18
9. Portland, Ore. Price/rent ratio: 18
10. Albuquerque, N.M. Price/rent ratio: 18
Top 10 cities where it's more affordable to buy
1. Miami, Fla. Price/rent ratio: 6
2. Las Vegas, Nev. Price/rent ratio: 6
3. Arlington, Tex. Price/rent ratio: 7
4. Mesa, Ariz. Price/rent ratio: 8
5. Phoenix, Ariz. Price/rent ratio: 8
6. Jacksonville, Fla. Price/rent ratio: 8
7. Sacramento, Calif. Price/rent ratio: 10
8. San Antonio, Tex. Price/rent ratio: 11
9. Fresno, Calif. Price/rent ratio: 11
10. El Paso, Tex. Price/rent ratio: 11
See Trulia.com's complete rankings.