From Trulia Blog on Rent Vs Buy Spring 2012
Rentals are at over 92% capacity, per the United States Census Bureau, and rates are high.
Meanwhile, the percentage of home price decline from the peak of value is 20.4%, per the Federal Housing Finance Agency.
Per Trulia calculations, Baltimore’s Price-to-Rent Ratio is 8.1. If it is less than 15, Trulia says that if you plan to live in the house five years or more, it is a good time to buy. If you are planning to stay less, than if the ratio is less than 10, which ours is, it could still be a good deal depending on closing costs and moving expenses.
The calculations do take into account the additional costs of homeownership such as insurance and maintenance.
Here is an explanation of Trulia’s Methodology, per their website:
Trulia calculates the price-to-rent ratio for 100 major U.S. metros by estimating the ratio of asking sales prices to asking rents, after adjusting for attributes of the properties and their locations. The ratio reflects the relationship between sales and rental prices for units with similar attributes in similar neighborhoods. The Winter 2012 report is based on asking prices for sale and rental homes on Trulia.com between December 1, 2011 and February 29, 2012.
Sample Price-to-Rent Ratio Calculation (after adjusting for property attributes and neighborhood attributes):
- Asking Sales Price: $200,000
- Asking Monthly Rent: $1500
Price-to-rent ratio: $200,000 ÷ ($1,500 x 12) = 11.1
So that means it really IS a great time to buy a house in Baltimore if you plan to stay in it for five years or more.
If you are ready, and would like to take this rare opportunity with both low interest rates and low prices, contact me. I am here to help!