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TRULIA REVEALS TREND TOWARDS HOMEOWNERSHIP WHERE AFFORDABILITY TO BUY VERSUS RENT EXTENDS TO ALMOST FOUR IN FIVE MAJOR U.S. CITIES

Rent vs. Buy Decision in Coastal Cities – Los Angeles, Seattle, Boston, San Francisco, Portland and Oakland – Depends Less on Home Affordability, More on Personal Finances

 SAN FRANCISCO, April 28, 2011 – Trulia today released its Q2 2011 Rent vs. Buy Index, which compares the cost of buying and renting a two-bedroom apartment, condominium or townhouse in the 50 largest[1] U.S. cities. Since last quarter, buying a home has become more affordable than renting in nearly four out of five (80 percent) major cities; only in New York, Fort Worth and Kansas City was renting a less costly option than buying.

KEY FINDINGS

  • Falling Prices and Rising Rents Make Homes More Affordable in Q2 Versus Q1: Current market conditions consisting of steadily rising rents, falling home prices and low mortgage rates have tipped the rent versus buy scale in favor of homeownership.

·         Buying a Home Beats Renting in Las Vegas, Phoenix and Arlington

#

City

State

Price:Rent Ratio

Q2 2011

Price:Rent Ratio

Q1 2011

Q-to-Q % Change

1

Las Vegas

NV

6

6

-1%

2

Phoenix

AZ

7

8

-9%

3

Arlington

TX

7

7

2%

4

Fresno

CA

8

11

-30%

5

Miami

FL

8

6

22%

6

Mesa

AZ

8

8

-1%

 

·         Renting Reigns Supreme Over Buying in New York, Fort Worth and Kansas

#

City

State

Price:Rent Ratio

Q2 2011

Price:Rent Ratio

Q1 2011

Q-to-Q % Change

1

New York

NY

39

31

27%

2

Fort Worth

TX

30

19

57%

3

Kansas City

MO

22

21

4%

4

Los Angeles

CA

20

20

3%

5

Memphis

TN

20

20

-4%

6

Seattle

WA

19

24

-20%

 

·         Price:Rent Ratios in Fresno, Omaha and San Jose Experience Biggest Quarter-Over-Quarter Movement in Favor of Homeownership

#

City

State

Price:Rent Ratio

Q2 2011

Price:Rent Ratio

Q1 2011

Q-to-Q % Change

1

Fresno

CA

8

11

-30%

2

Omaha

NE

10

13

-25%

3

San Jose

CA

12

15

-21%

4

Seattle

WA

19

24

-20%

5

Cleveland

OH

14

17

-15%

6

Detroit

MI

10

12

-15%

 

  • Consumers Face Difficult Decision in Coastal Cities: Aspiring homeowners in Los Angeles, Seattle, Boston, San Francisco, Portland and Oakland face a bigger challenge when it comes to deciding between renting and buying a home. The cost of homeownership in these coastal cities continues to be more expensive than renting; however, it may make more financial sense to buy depending on the situation.

 

#

City

State

Rent-to-Buy Ratio

Q2 2011

Rent-to-Buy Ratio

Q1 2011

Q-to-Q % Change

1

Los Angeles

CA

20

20

3%

2

Seattle

WA

19

24

-25%

3

Boston

MA

19

17

14%

4

San Francisco

CA

19

21

-7%

5

Portland

OR

18

18

1%

6

Oakland

CA

16

18

-13%

 

PRE-APPROVED QUOTES 

·         "With home prices nearing a double dip and more foreclosures expected to flood the housing market over the next two years, the decision between renting and buying a home across most of the country has clearly moved in favor of buying,” says Ken Shuman, Head of Communications at Trulia. “As we head into the summer buying season, those looking to buy a home should be encouraged by improvements in the market and feel optimistic about their chances of finding an affordable home, much more so than in previous years.”

·         “Aspiring homeowners should focus their energies on locking down a low mortgage rate sooner than later. While home prices are unlikely to return to pre-crash levels, today’s low interest rates will likely rise thanks to inflation and spikes in the Fed rates,” notes Shuman. “As the government wind downs its role in the mortgage markets higher mortgage interest rates will be inevitable.”

 

MULTIMEDIA

  • To view an interactive map illustrating Trulia’s Q2 2011 Rent vs. Buy findings, click here.
  • To view a full list of Rent vs. Buy Index rankings for the 50 largest U.S. cities, click here.
  • To view a slideshow of the findings, click here.
  • To check out Trulia’s current and archived industry reports and consumer surveys, click here. 

 

METHODOLOGY
Trulia calculated the Q2 2011 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 April 1, 2011. 

 

Sample Price-to-Rent Ratio Calculation:

  • Median List Price: $140,201.37
  • Median Rent: $1,871.65
  • Price-to-rent ratio: $140,201.37 ÷ ($1,871.65 x 12) = 6

Interpretation Key:

  • Price-to-Rent Ratio of 1-15: Owning a home is much less expensive than renting in this city.
  • Price-to-Rent Ratio of 16-20: The total costs of homeownership in this city are greater than the costs of renting, but it might still make financial sense to buy depending on the situation.
  • Price-to-Rent Ratio of 21+: Renting in this city is much less expensive than owning a home. 

Definitions:

  • Total costs of homeownership include mortgage principal and interest, property taxes, hazard insurance, closing costs at time of purchase and ongoing HOA dues and private mortgage insurance, where applicable. It also includes an offset for the tax advantages of homeownership, including mortgage interest, property tax and closing cost deductions.
  • Total costs of renting include rent and renter's insurance. 

 

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 helps you find the home that best meets your specific needs. Our smart and personalized real estate search experience brings together 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.

                                                                                                                     

MEDIA CONTACTS:

Chip Scarinzi for Trulia, chip.scarinzi@edelman.com, 415.486.3221
Daisy Kong, dkong@trulia.com, 415.400.7391



[1] Based on the U.S. Census’ 2009 population estimates


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