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Buying & Selling a Home

Rent? Buy? Do the Math

Renters have the edge in many cities.

Think of the buy-versus-rent relationship as akin to a price-earnings ratio for stocks. The housing ratio rises as rents fall, home prices climb, or both. Some markets sport historically high -- maybe dangerously high -- ratios. The P/E in Miami, where p is the median mortgage payment and e is the median apartment rent, has spiked from 13.5 in 2001 to 24.3 last summer, according to real estate consultants Torto Wheaton. Other dicey markets: Los Angeles, Las Vegas, Phoenix and Washington, D.C. Until these housing P/Es revert to more normal ranges -- the national average is 15 -- you may find renting a bargain. Use Kiplinger's online calculator to weigh your options.