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As if house hunting weren’t already complicated enough, the recession has turned certain markets upside down. In some U.S. cities, such as Miami, where most people rent, prices have plummeted in the past two years, making homeownership more accessible.
Meanwhile, in such cities as Omaha, where the economy fared relatively well during the recession, home prices have started rising and potential buyers are finding better deals renting.
For the undecided, the cost factor can be highly persuasive, although it is far from the only issue when people decide to rent or buy. Trulia’s real estate consumer advocate, Tara-Nicholle Nelson, says many other needs come into consideration when people are house hunting—such as schools and recreational amenities.
To see where renting is the better deal and where buying is more economical, real estate website "Trulia.com" calculated a ratio based on the average cost to rent or own a two-bedroom apartment, condo, or town home in the country’s 50 largest cities.
According to Trulia, a price-to-rent ratio of 1-to-15 means renting is much less expensive than owning a home in a particular city, while a ratio of more than 21 means owning a home is more expensive than renting. The gray area lies in the 16-20 range, which means the cost of owning a home is greater than renting but might still make financial sense, depending on a person’s situation.
Click here to see which cities are on top for renters and buyers.