A quick, useful first filter for the rent vs buy question — before you need the full calculator.
Divide the home price by the annual rent for a comparable property. If a home costs $400,000 and comparable rent is $2,000/month ($24,000/year): $400,000 ÷ $24,000 = 16.7x price-to-rent ratio.
| Ratio | Signal |
|---|---|
| Under 15 | Buying tends to win financially in most scenarios |
| 15-20 | Depends heavily on your time horizon and local conditions |
| 20-25 | Renting and investing often wins, especially short-term |
| Over 25 | Strong signal that renting is more financially efficient |
San Francisco: ~38x. Los Angeles: ~32x. New York City: ~28x. Miami: ~24x. Austin: ~18x. Chicago: ~13x. Houston: ~12x. Cleveland: ~10x.
The PTR doesn't account for your specific down payment, mortgage rate, property tax, investment return, or how long you'll stay. It's a quick filter, not a full answer. When the ratio suggests buying is borderline (15-20x), use the full calculator to make the call.
The price-to-rent ratio is a first filter — the calculator shows the complete picture.