From Huffington Post, June 8, 2010
If you're looking for a quick and easy calculation about whether you should finally buy your dream home, you'll likely want to first check out your area's price-to-rent ratio.
By comparing the average purchase price of a 2-bedroom home --including mortgage fees and maintenance expenses -- with the average rental price for 2-bedroom apartments, condos, and townhouses, Trulia calculated the price-to-rent ratio to determine whether it is better to rent or buy in a particular city.
Cities with low price-to-rent ratios (under 15) indicate that is cheaper to own a home than rent.
"At the peak of the real estate bubble, cities like Miami, Phoenix and Las Vegas were not affordable for many. Now the opposite is true," said Pete Flint, co-founder and CEO of Trulia. "Home sellers in these hard hit areas are forced to lower their prices to compete with all the foreclosures on the market. As a result, these unattainable markets are so affordable it makes better financial sense to buy than rent."
Dallas, TX
Price-to-Rent Ratio: 19
Average list price: $293,767
Average rent: $1,324
San Diego, CA
Price-to-Rent Ratio: 20
Average list price: $396,409
Average rent: $1,670
Cleveland, OH
Price-to-Rent Ratio: 20
Average list price: $246,895
Average rent: $1,046
Kansas City, MO
Price-to-Rent Ratio: 20
Average list price: $240,076
Average rent: $992
Oklahoma City, OK
Price-to-Rent Ratio: 21
Average list price: $195,663
Average rent: $763
To learn more about outstanding opportunities to purchase your home or condo in San Diego or Orange County, call Tim James (909) 702-3220 or email at drtimjames@usa.net. To search the entire Southern California MLS, go to http://www.homejames-sandiego.com/ or http://www.homejames-orangecounty.com/.
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