April 18, 2012
Owning versus Renting a Single Family Home
Own versus Rent Ratios for Twenty-Six Cities in Greater Phoenix
Real Estate Analyst
Grand Canyon Title Agency, Inc. FWilcox@GCTA.com 602-648-1230
April 18, 2012: The cost to own versus paying rent for a single family home has gone up. In March 2012 the Own versus Rent ratio was 11.0 compared to 8.7 in March 2011. The lower the ratio the better to own, and the higher the ratio the better to rent.
While there are many factors to consider whether to own or to rent, the Own versus Rent Ratio highlights trends between purchase price and rent indicating whether owning or renting is less expensive. The lower the ratio the better to own and the higher the ratio better to rent. All the ratios in this report calculate only single family homes and do not include patio homes, townhouses, etc.
Calculating Own versus Rent Ratios
The ratio is calculated by annualizing the median monthly rent and then dividing the median purchase price by the annualized rent.
A sample calculation is as follows: Median purchase price $100,000. Median monthly rent $1,000.
Monthly rent of $1,000 is annualized by multiplying by twelve months which equals $12,000. The purchase price of $100,000 is divided by $12,000 and the Own to Rent Ratio is 8.3