Q2 Rent versus Buy
Realtors, are you keeping up with what real estate search websites are telling your consumers? Do you know if your city appears as a rent-favorable city over a buy-favorable city? Today, Trulia.com announced their second quarter “Rent V Buy Index” (RVB) which is a study of the 50 largest cities. Last quarter, the RVB Index revealed that in 72% of the largest 50 cities, it was more advantageous to buy than rent a two bedroom home.
This quarter, Trulia states that in all but three cities, it is more advantageous to buy than rent, putting the current RVB Index at 80%. Good news for Realtors!
Findings lean toward homeownership
Renting is on the rise but so are rents along with pending home sales and new home sales- the industry is slowly but surely gearing back up amidst a double dip in home pricing and a potential for more foreclosures to hit the market after banks resume foreclosing after hitting the pause button to deal with negotiating with the government about their wrongful foreclosures.
“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.”
Check out the interactive mapping tool
Last quarter, we introduced you to the RVB interactive tool that lets you (and consumers) look at a variety of factors that impact whether your city is ripe for buying or renting. We recommend taking time to look at all the factors in your city.
Full press release:
Update 12:36pm CST 04.28.2011: press release edited to reflect Trulia’s current public press release. Some wording was different.
April 28, 2011 06:00 ET
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, CA–(Marketwire – Apr 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 largest1 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% |
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- 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% |
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- Price:Rent Ratios in Fresno, Omaha and San Jose Experience Biggest Quarter-Over-Quarter Movement in Favor of Homeownership
| # | City | State | Price:RentRatio Q2 2011 |
Price:RentRatio 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 winds down 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. To view the complete methodology including sample price-to-rent ratio calculation, interpretation key 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 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.
1 Based on the U.S. Census’ 2009 population estimates
