Price-to-Rent Ratio
A measure of whether buying or renting is more economical: home price divided by annual rent for an equivalent property.
Definition
Under 15: buying strongly favored. 15-20: roughly neutral. 20-25: renting favored. Over 25: renting strongly favored. The ratio captures most of the rent-vs-buy decision in one number. Major US markets in 2024 commonly sit at 20-30 — renting is often the better math.
Formula
price_to_rent = home_price / (monthly_rent × 12)
Related wealth terms
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