SOURCE: Trulia

Trulia

January 24, 2011 06:00 ET

Homeownership More Affordable Than Renting in 72 Percent of Major U.S. Cities Despite Growing Consumer Preference to Rent

Trulia's Rent vs. Buy Index Identifies Miami, Las Vegas, Arlington, Mesa and Phoenix as Nation's Most Affordable Markets to Buy Compared to Renting

SAN FRANCISCO, CA--(Marketwire - January 24, 2011) - Trulia.com (www.trulia.com), a top site for homebuyers, sellers and renters, today released its latest Rent vs. Buy Index which found that it is more affordable to buy than to rent a two-bedroom home(1) in 72 percent of America's 50 largest cities(2). Meanwhile, a nation of renters has emerged as more Americans rent by choice or due to unforeseen financial difficulties. In contrast to this nationwide trend, renting is only less expensive than buying in four of the cities included in this study -- namely New York, Seattle, Kansas City and San Francisco. The remaining 10 cities are locations where buying may still be a financially sound long-term decision despite the relative affordability of renting.

"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. "Though necessary for achieving true economic recovery, stricter bank lending practices have also further aggravated the struggling housing market in the short term. Even highly-qualified homebuyers face intense scrutiny on their income, savings, existing debt and credit history before they can get a mortgage loan."

Cities overwhelmed by foreclosure filings and unemployment, including many cities in Florida, Arizona, Nevada and central California, typically correspond to more affordable markets for prospective buyers; however, there are exceptions. Oakland and Los Angeles, which are experiencing similar rates of unemployment or foreclosure filings as Phoenix, Miami and Sacramento, are still more affordable to renters. Moreover, close proximity to economic centers with promising job growth projections has propped up both the demand for homes and costs of homeownership in Oakland and Los Angeles.

"Although owning a home is relatively more affordable in most cities, market conditions have caused an interesting demographic swap between traditional renters and buyers," said Tara-Nicholle Nelson, Consumer Educator for Trulia. "For example, lifelong renters are seizing the opportunity to become homeowners while affordability is high. At the same time, a growing number of long-time homeowners are finding themselves tenants -- some by choice and others by necessity."

Top 10 Cities to Rent vs. Buy

  Rank City State Price:Rent Ratio  
  1. New York NY 31  
  2. Seattle WA 24  
  3. Kansas City MO 21  
  4. San Francisco CA 21  
  5. Memphis TN 20  
  6. Los Angeles CA 20  
  7. Fort Worth TX 19  
  8. Oakland CA 18  
  9. Portland OR 18  
  10. Albuquerque NM 18  

Top 10 Cities to Buy vs. Rent

  Rank City State Price:Rent Ratio  
  1. Miami FL 6  
  2. Las Vegas NV 6  
  3. Arlington TX 7  
  4. Mesa AZ 8  
  5. Phoenix AZ 8  
  6. Jacksonville FL 8  
  7. Sacramento CA 10  
  8. San Antonio TX 11  
  9. Fresno CA 11  
  10. El Paso TX 11  
  • For an infographic illustrating the above findings, click here.
  • For a full list of Rent vs. Buy Index rankings for the 50 largest U.S. cities, click here.
  • For an interactive map of the Rent vs. Buy Index, click here.
  • For a list of consumer-oriented tips on the Top 5 hidden costs of renting and buying a home, click here.

Methodology
Trulia calculates the price-to-rent ratio for the 50 largest U.S. cities using the median list price compared with the median rent on two-bedroom apartments, condominiums and townhomes listed on Trulia.com. To view the complete methodology including sample price-to-rent ratio calculation, interpretation key and definitions, click here.

About Trulia, Inc.
Trulia.com is the fastest growing online real estate site focused on empowering buyers, seller and renters with smarter tools to help you find the right home. Trulia is headquartered in downtown San Francisco and is backed by Accel Partners and Sequoia Capital. Trulia is focused on helping you find the home that truly meets your needs, and delivers on what's most important for you. Ultimately, we built a smart real estate search experience bringing together local information, community insights, market data and national listings all in one place.

(1) Comparison made between two-bedroom apartments, condominiums and townhomes listed on Trulia.com.
(2) Top 50 U.S. cities based on population 

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