It’s the American Dream to own one’s home. And realizing that dream might keep more money in your bank account than if you were renting.
Based on current market condition, buying a home is cheaper than renting in 74 percent of major U.S. cities according to real estate website Trulia.com’s Summer 2011 Rent vs. Buy Index. The listings are based on a price-to-rent ratio of the median listing price divided by the annualized media rent. Ratios 15 and lower indicate buying is less expensive than renting, while rations 20 or higher indicate renting is less expensive than buying.
The index compares the cost of buying and renting a two-bedroom apartment, condominium or townhouse in America’s 50 largest cities, based on population.
The Top Five cities where buying a home beats renting, with the price:rent ration in italics:
1. Las Vegas (6)
2. Detroit (7)
3. Mesa, Ariz. (7)
4. Fresno, Calif. (7)
5. Arlington, Texas (8)
The Top Five cities where renting is cheaper than buying:
1. New York (36)
2. Fort Worth, Texas (32)
3. Omaha, Neb. (27)
4. Seattle (24)
5. San Francisco (24)
According to the U.S. Census Bureau’s 2009 American Housing Survey, 30 percent of all housing units in the U.S. are renter-occupied or vacant for-rent. A large chunk – 27 percent – of the rental housing stock consists of single-family detached home. When adding townhomes – single-family attached units – the share of rental stock due to single-family homes is roughly one-third.