“Take the house price and divide it by what it costs to rent for a year to get the price-to-rent ratio: Price divided by (Monthly rent x 12) = X.
(Estimates for additional costs of homeownership, such as taxes, maintenance and insurance are factored into the equation.)
If the number is higher than 15, it’s generally not a good time to buy.
If the ratio is less than 15, buying is a better deal than renting, if you plan on living there for at least five years to offset moving and closing costs.
By the time the number hits 20, renting is apparently the way to go, except if buyers expect to stay put for at least 15 years, according to a formula used by trulia.com to rank major urban U.S. centres every year.
B.C.’s numbers, as shown in the graphic, are through the roof, from 29 (Prince George) to 73 (West Vancouver).”
“Local real estate experts say the number is simplistic and doesn’t factor in other market drivers.”
– from ‘Where it’s cheaper to buy (or, more likely, rent) in B.C.’, Susan Lazaruik, The Province, 12 May 2012
Ergo, it is not a good time to buy, anywhere in BC, especially in the LML.
The only other “market driver” of importance is the insanity that accompanies a speculative mania.
Almost all purchases are speculative, and have been so for years.
It is good to see The Province printing something like this.
Will their readers realize what it means?