Buying v. Renting

There was an interesting article in the New York Times a couple of weeks ago about Renting v. Buying.  What they did was they took the Sales Price of a home and divided it by the annual rent that someone would pay.  If the ratio came out to be less than 15, they concluded it was a good time to buy.  If the ratio came out over 20 they concluded it was a good time to rent.  If the ratio was somewhere in between it was debatable. 

Anyway this article seemed kind of fascinating so I thought I would share it.  It also pointed out that most of the Silicon Valley and the East Bay most property ratios are above 30 making it a better time to rent then buy. 

Although no formula I have found is perfect other than actually crunching through all the numbers ones self according to ones exact financial situation.  I did find this interesting and a good for ball parking if you are making the rent to own decision. 

In addition at a recent meeting of the INCOME PROPERTY MARKETING GROUP we discussed rents and for the Northern part of the city (where a lot of people want to live) the rents have gone up significantly and there are much less vacancies available.  If you are looking to buy often times the costs are 3X or greater in mortgage payments than rent.