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 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]