NEW YORK (MainStreet) — As the housing market and the economy as a whole remain unsteady, more consumers plan to rent rather than buy homes this year, compared to 2010. However, as one new study shows, in most parts of the country, this strategy will end up costing consumers more money in the long run.
Renting a home is now more expensive than owning one in every major metropolitan area in the country with the exception of four cities, according to Trulia.com’s most recent Rent Vs. Buy index. The only four cities where it is definitely cheaper to rent rather than buy are New York, Seattle, Kansas City and San Francisco.
Trulia, which tracks real estate data, found that renting has generally become more expensive compared to owning as demand for rentals has increased in the tough economy, while housing prices continue to remain low in most regions.
“Since the start of the ‘Great Recession,’ many former homeowners have flooded the rental market. Following the principles of supply and demand, renting has become relatively more expensive than buying in most markets,” said Pete Flint, CEO and co-founder of Trulia.
Trulia compared the median listing prices for rentals and home sales in the 50 largest cities to find out which had the best and worst ratios. By Trulia’s metric, any city where the average price of buying a home is more than 21 times the cost of renting one is deemed a definitely good place to rent, while any city where the price of buying is less than 15 times the cost of renting is a buyer’s paradise.
According to Trulia, 20% of cities fall into a gray area where renting may sometimes be a better option, but the vast majority of cities, or roughly three quarters, are definitively better for buying rather than renting.
The cities that offer the best deal for buying compared to renting are mostly in the South and Southwest, where the housing market was hit the hardest. Miami tops the list, with Las Vegas, Phoenix and Sacramento not far behind.
If you’re tired of renting and are looking for a good deal on housing prices, now may be the time to head south.
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