THE BASIS POINT

Is It Better To Rent or Buy A Home? (Interactive Calculator)

 

Rent Versus Buy?Most working adults have asked themselves whether it’s better to rent or buy a home, and most of them ask the question often. It’s hard to avoid the question when most of adult life is spent either at home or working to pay for their home.

The bare bones mathematical answer lies in whether the home can produce the right income level. Economists use a housing price-to-rent ratio in a similar manner as a price-earnings ratio for stocks. This relationship between a home’s value and its income is a sophisticated manner of determining whether home prices are right — whether or not you live in the property. But if you just want a quick and fairly accurate analysis of whether you should rent or buy, check out this rent versus buy calculator just launched by the New York Times. Very handy for quick analysis, and then like any other investment, you need to talk to a professional. At least this tool will get you prepared, and it will help you determine if the professional you’re talking to knows what they’re talking about.

 

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