To rent or buy?

TRD New York /
May.May 11, 2011 11:16 AM

With U.S. mortgage rates lowering and rents set to increase with an upshoot in occupancy rates, real estate agents are proclaiming now is the time to buy a home. However, you can make an equally strong case for renting, according to the New York Times. In fact, it’s a pretty close race.

Neither mortgage rates nor rents are likely to quickly sky-rocket and house prices remain higher than their long term average. The relative merits of renting and buying have not been so equal since the beginning of the housing bubble, a decade ago.

Rent ratios provide a healthy framework for renting versus buying decisions, the Times said, and can be calculated by dividing the sales price of a home by the annual cost of renting a similar property. One should perhaps think of buying if that number is below 15. Miami’s average ratio is below 15 where New York’s is around 29. [NYT]


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