Friday, August 8, 2008

Price to Rent Ratio explained

http://money.cnn.com/2008/07/07/real_estate/price_to_rent.moneymag/index.htm?postversion=2008071604

It's been a bit.

But this is a storage spot as well.

Price to rent ratio.

For example, if you can purchase a home for $540,000 but can rent a similar one for $36,000 a year, your so-called price-to-rent ratio would be 15.
In general, buying starts to look attractive when the P/R ratio is around 15 or lower, says Newport. (The current national average is 12.5.) As your market's P/R ratio falls, more sellers are likely to come into the market. So demand could pick up and help stabilize home prices.

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