Property search and information site Trulia.com has recently researched major cities in the USA to put together a rent vs. buy affordability index. Their methodology was to collect data from the top 50 most populated American cities, calculating the price-to-rent ratio using the average list price compared with the average rent on two-bedroom apartments, condos and town homes.

Top 10 Cities to Buy Rather than Rent

Commenting on the best cities in ‘Which to Buy vs. Rent’ Trulia say that: Areas hardest-hit by the foreclosure crisis top this list i.e. cities in California, Nevada, Florida and Arizona. The large numbers of foreclosures in these areas have caused house prices to fall significantly, so its now actually much less expensive in these cities to buy than to rent.

The average price-to-rent ratio for these Top 10 Cities to Buy vs. Rent was 9. A price-to-rent ratio of 15 or below is what many economists indicate that buying a home costs roughly the same as renting, so clearly in these areas, buying would now appear to offer good financial value.

Top 10 Cities to Rent Rather than Buy

Commentary on the best cities in Which to Rent, Trulia say that these areas tend to be urban job centers with large rental markets.

Some of the mid-western and southern regional hubs (such as Omaha, Dallas and Oklahoma City) never had the high levels of inflation in home prices early in the decade, and escaped both the property bubble and subsequent deflation in prices at the end of the decade. The more stable house prices in these economic centres has resulted in more affordable renting than buying in these areas.

The top five on this list ranged from 22 for San Francisco and Portland to 33 for New York City; most of the rest of the cities on the list did not have ratios astronomically more expensive to buy than to rent.

For many of these cities, even though home buying is significantly more costly than renting, prices are still much lower than they have been in a long, long time. For example, in 2007, Miamis price: rent ratio was 27 - now it is 8. San Franciscos was 38 - now it is 22.