Tuesday, March 22, 2005

Rent: The Price To Earnings Ratio Of Housing

It is fair to say that the rent a home can draw is the equivalent of a price-to-earnings ratio of a stock. If that is the case, why would anyone want to be a landlord?

The Wall Street Journal reports "Since 1999 and 2000, the relationship between rents and home prices has "broken down..In San Francisco, the monthly cost of renting an apartment is just 45% of the monthly cost of buying a home, down from 67% in 2001..Washington, D.C., rental costs are now just 59% of the cost of owning, down from 82% in 2001..in Miami, rental costs are 63% of the cost of homeownership, down from 89% in 2001."


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