To buy or not to buy? That is the question many renters face when trying to decide when or if to jump into the housing market. On top of monitoring mortgage rate trends and housing prices, analyzing the price-to-rent ratio for your desired city is a helpful tool for determining whether it is a better personal finance choice to rent or buy a home. <\/p>\n\n\n\n
The price-to-rent ratio is calculated by dividing the median home price by the annual median rent. A high price-to-rent ratio of 21 or more suggests that it is more expensive to buy a home than to rent, while a lower price-to-rent ratio of under 16 suggests that it is less expensive to buy a home rather than rent. A moderate price-to-rent ratio between 16-21 suggests that it is likely more favorable to rent rather than buy, but it will depend on individual financial circumstances. <\/p>\n\n\n\n
It\u2019s important to note that the price-to-rent ratio doesn\u2019t take into account the overall affordability of an area, but it can be useful in determining if specific property types are fairly valued compared to rental prices. <\/p>\n\n\n\n
Enjoying our content? Subscribe to our free<\/em><\/strong> weekly newsletter<\/em><\/strong><\/a> to get real estate market insights, news, and reports straight to your inbox.<\/em><\/strong><\/p>\n\n\n\n To help renters, buyers, and investors find the next best city to rent or buy a home in, Zoocasa calculated the price-to-rent ratio in 32 cities across the US for single-family homes and condos. Median rental prices were sourced from Rent.com\u2019s<\/a> most recent report and median single-family and condo prices were sourced from the National Association of Realtors\u00ae and individual real estate boards. <\/p>\n\n\n