Buy or rent? Trulia says buying is cheaper here (but not everywhere)
Trulia, comparing the cost of buying in Baltimore with the cost of renting, says buying is cheaper. The costs are more in favor of buying vs. renting here than they are in most large cities, according to Trulia's figures: We're No. 10.
Trulia is using asking prices and rents from its site -- it has both sides of the housing coin -- and runs them through a calculation we've talked about before: Divide the asking price by a year's worth of rent.
If your number is 15 or lower, buying is better, in Trulia's book. If it's above 15, advantage renting -- especially the higher that number gets.
Baltimore's figure is 11. Lowest of all is Las Vegas, at 6. At the other end is New York with a whopping 36, which Trulia (in what seems like an understatement) dubs "much more affordable to rent."
Patrick Killelea outlines a different rule of thumb on his housing-bubble-and-bust site Patrick.net.
I walked it out in this post, but bottom line, he turns the calculation around -- divide a year's worth of rent by the asking price. Nine percent or more suggests that "prices are reasonable," he writes.
None of this necessarily tells you where home prices will go from here, especially with unemployment, foreclosures and other factors weighing on the market. (Regional averages, meanwhile, don't tell you whether the specific home you're looking at is a good deal.) But as Killelea notes, there is a certain amount of peace of mind that comes with buying a home that wouldn't lose you money if you had to rent it out.
I polled you a few months ago on whether you thought owning or renting had the edge over the next 20 years, and owning got just 52 percent of the vote. Twenty-eight percent of you thought renting had the upper hand, while the rest -- 20 percent -- thought it was too close to call.
Have you been doing any rent vs. buy calculations of your own? What are your conclusions?