Rent vs. Buy: The Math Has Changed

The Price-to-Rent Ratio

The golden metric for this decision is the Price-to-Rent ratio. Divide the home price by the annual rent of a comparable property. If the number is above 20, it is generally better to rent. In many major metros today, this ratio is hovering around 25-30.

The Hidden Costs of Owning

Rent is the maximum you will pay. A mortgage is the minimum you will pay. When you factor in property taxes, insurance, maintenance (1% of home value/year), and closing costs, renting and investing the difference often outperforms buying over a 7-10 year horizon.