Where Does It Make Sense To Buy A Home?

The answer is basically everywhere. Jed Kolko reports on the findings of a new study examining the ratio of home prices to annualized rent in 100 of the largest metropolitan areas in the United State.
March 22, 2012, 12pm PDT | Jonathan Nettler | @nettsj
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"It is now cheaper to buy a home than to rent in 98 of the 100 largest U.S. metropolitan areas," according to Trulia's newly released Winter 2012 Rent vs Buy Index, which "tracks whether it is more affordable to rent or to buy a home by looking at asking prices on Trulia.com for rentals and for-sale homes with similar attributes in similar neighborhoods."

The index shows that lowest price-to-rent ratios can be found in Detroit, Oklahoma City, and Dayton, Ohio. Of the 100 metropolitan areas, only Honolulu and San Francisco were found to have ratios outside the "buying is cheaper" range.

"What factors contribute to higher price-to-rent ratios in some metros?" writes Kolko. "Surprise! It's not the effect of the housing bubble. Metros where prices fell more during the bust don't have either lower or higher price-to-rent ratios, on average, than other metros that weathered the bust better...Long-term fundamentals, not short-term changes in prices, determine which metros have high price-to-rent ratios."

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Published on Wednesday, March 21, 2012 in The Atlantic Cities
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