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HOMEOWNERSHIP BEATS RENTING IN 74 PERCENT OF MAJOR U.S. CITIES

Trulia Releases Summer Rent vs. Buy Index, Revealing Housing Market Rebound in Miami and Continued Setbacks in Detroit, Fresno and Sacramento

SAN FRANCISCO, August 16, 2011 – Trulia today released its Summer 2011 Rent vs. Buy Index, which compares the cost of buying and renting a two-bedroom apartment, condominium or townhouse in America’s 50 largest cities based on population.

 

Homeownership Affordability Remains High
Based on current market conditions, buying a home is cheaper than renting in 74 percent of major U.S. cities. Meanwhile, it is clearly better to rent in New York, Fort Worth, Omaha, Seattle, San Francisco and Kansas City. In between both sides of the rent versus buy spectrum, there is a grey area. Depending on personal circumstances, such as one’s tax bracket, it may make more sense to buy a home in Oakland, Austin, San Jose, Memphis, Boston, Los Angeles and Portland, even though it is still relatively cheaper to rent.

 

Top Five Cities Where Buying Beats Renting

  

#

City

State

Price:Rent Ratio

1

Las Vegas

NV

6

2

Detroit

MI

7

3

Mesa

AZ

7

4

Fresno

CA

7

5

Arlington

TX

8

 

 

 

 

 

 

 

Top Five Cities Where Renting is Cheaper than Buying

 

#

City

State

Price:Rent Ratio

1

New York

NY

36

2

Fort Worth

TX

32

3

Omaha

NE

27

4

Seattle

WA

24

5

San Francisco

CA

24

 

NOTE: The price-to-rent ratio is the median listing price divided by the annualized median rent. Ratios that are 15 and under indicate buying is less expensive than renting, while ratios that are 20 or higher indicate renting is less expensive than buying.

 

Housing Market Rebounds and Setbacks in Foreclosure Hotspots

Buying a home in cities flooded with foreclosures continues to be considerably cheaper than renting, but this may be poised to change in the coming months. In Miami, for example, it is still less expensive to buy, but a mini-buying boom created by foreign investors and foreclosure freezes have caused its price-to-rent ratio to jump by 112 percent from 6 in January to 13 in July. Meanwhile, recent job gains in the auto industry have not countered Detroit’s falling home prices. For now, the city has experienced a setback since January with its price-to-rent ratio dipping 39 percent. Las Vegas, on the other hand, continues to be the best place to buy instead of rent for the past six months.

 

#

City

State

Price:Rent Ratio

July 2011

Price:Rent Ratio

January 2011

 % Change

1

Miami

FL

13

6

112%

2

Phoenix

AZ

8

8

1%

3

Las Vegas

NV

6

6

-7%

4

Tucson

AZ

13

14

-10%

5

Mesa

AZ

7

8

-11%

6

Sacramento

CA

8

13

-17%

7

Fresno

CA

7

11

-32%

8

Detroit

MI

7

12

-39%

 

PRE-APPROVED QUOTES

  • "While recent stock market volatility on top of the slow economic recovery makes homebuyers nervous, it has not destroyed the American dream of homeownership. However, prospective homebuyers, who are ready and qualified to buy, face an uphill battle despite falling home prices and record-low mortgage rates,” said Ken Shuman, Head of Communications at Trulia. “Today, many banks are actually less enthusiastic about approving residential mortgage applications, which has dragged out the home buying process. Until a middle ground on lending practices can be met, many highly-qualified buyers may be forced to be renters by choice for now.”

 

  •  “Many aspiring homeowners are on the fence about renting and buying in today’s market. Should they take advantage of falling home prices and low borrowing costs, or should they continue to rent until the economy stabilizes?” said Ken Shuman, Head of Communications at Trulia. “Price alone should never be the sole factor in deciding to purchase a home. Instead, buyers should first ask themselves if they plan to live in the home for at least seven-to-10 years, could make monthly payments on the house, and have enough cash in the bank for a down payment and an additional six to eight months worth of mortgage payments. If you can answer ‘yes’ to each of these questions, then the cost of buying a home definitely outweighs renting in most cities.”

 

MULTIMEDIA

  • To view a new interactive data visual illustrating how the cost of renting versus buying has changed over the last six months, click here.
  • To view a slideshow of the findings, click here.
  • To view a full list of Rent vs. Buy Index rankings for the 50 largest U.S. cities, click here.
  • To check out Trulia’s current and archived industry reports and consumer surveys, click here.

 

METHODOLOGY
Trulia calculated the price-to-rent ratios 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 as of July 1, 2011. To view the complete methodology including sample price-to-rent ratio calculation, interpretation key for the ratio and definitions, click here.

 

ABOUT TRULIA, INC.
Trulia is the fastest growing online real estate resource, empowering buyers, seller and renters with smarter tools to help them find the right home. Trulia gives you the inside scoop to find you find the best place to live. Our smart and personalized real estate search experience brings together vital local information, community insights, market data and national listings all in one place. Trulia is headquartered in downtown San Francisco and is backed by Accel Partners and Sequoia Capital. 

For further information: Daisy Kong PR Manager dkong@trulia.com 415.400.7391


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