NYT: buying in Pittsburgh remains a relatively good deal (California: rentals, house prices)

[BrianTH]

So this is an update of a previous analysis:

Buy vs. Rent: An Update - NYTimes.com

Basically, they looked at the ratio of buying versus renting for a typical home in 55 metro areas. If the number is higher that means buying is a less attractive proposition, and if it is lower that means renting is a less attractive proposition. Their suggested rule of thumb is to prefer buying when the ratio is under 15, prefer renting when the ratio is over 20, and have a slight preference for renting between 15 and 20 unless you find a home you like and plan to stay around a while. I'd probably suggest a more detailed and personalized analysis if you were serious about making this decision, but as a rough rule of thumb that probably isn't bad.

So the national average for metro areas was 15.1, and the highest among the 55 were East Bay, California (35.9), Honolulu (34.4), and San Jose (32.7). In the East, Manhattan was pretty high at 26.7, but interestingly Charlotte, NC, was higher at 27 (I'm guessing rentals are pretty cheap in Charlotte). Looking at Pittsburgh's neighbors, DC was 18.3 (houses are expensive, but rentals aren't cheap either), Columbus and Baltimore were 17.6, and Philly was 16.1. Finally, Cleveland was the second-lowest among the 55, at 11.7.

But guess which metro was the lowest of all? That's right, Pittsburgh, at 11.4.

Interestingly, some of the other metros low on the list have seen recent crashes in house prices, such as Detroit, Phoenix, Tampa, and Las Vegas. Personally, I would be careful about buying in such markets until I was sure rents weren't coming down, as opposed to prices going up. But prices in Pittsburgh, and some of the other low cities like Dallas, have been relatively stable. Combine that with the favorable rent ratio, and it is reasonable to conclude buying is a relatively good idea in those markets.

Nothing we didn't know, but it is interesting to see it laid out this way.

Edit:

Here is the prior version of this study, with Pittsburgh again at the bottom (meaning it was a relatively good place to buy):

http://www.nytimes.com/interactive/2...ml?ref=economy

That one also showed the change in the ratio from 2005 to 2009. As you might expect, Pittsburgh's ratio was virtually unchanged, but some of the aforementioned cities had seen a big drop, meaning prices had decreased a lot faster than rents. Again, I would personally want to see the rent ratio in those cities stabilize before I decided to buy.

[rhondee]

It doesn't surprise me that many people here buy than rent.

I wound up buying my home while I was still in my 20's and was looking for a house to rent.The thought of buying never even crossed my mind but that's how I wound up getting my house.

The same thing happened to my sister and brother in law when they moved here after retiring from the military in '02. They were specifically looking to rent and wound up buying instead because it is so much cheaper.
When I bought my house I had to strip old wallpaper,and paint the whole interior. My sister's house was pretty much already totally redone when they bought it - freshly painted,wallpaper, new carpet,new kitchen cabinets new furnace and new a/c and they only paid $72k for it! Even though they originally wanted to rent-they couldn't walk away from not buying the home at that unbelievable price and buying it was much cheaper than renting.