The Price-to-Rent Ratio Formula
Price-to-Rent Ratio = Home Price ÷ Annual Rent (for a comparable home). Example: $420,000 home, comparable rental at $2,200/month ($26,400/year). P/R ratio: $420,000 ÷ $26,400 = 15.9.
Price-to-rent ratio interpretation guide
| P/R Ratio | Interpretation | General Guidance |
|---|---|---|
| Below 12 | Buying strongly favored | Buy — high rental cost relative to purchase price |
| 12–15 | Buying favored | Buy if staying 4+ years |
| 15–20 | Neutral zone | Analyze carefully; depends on timeline and investing |
| 20–25 | Renting favored | Rent and invest unless long-term buyer |
| Above 25 | Renting strongly favored | Buying likely a wealth disadvantage for most buyers |
2025 P/R Ratios by Major Market
2025 estimated price-to-rent ratios by major metro area (estimates based on market data)
| Metro Area | Median Home Price | Median Monthly Rent | P/R Ratio | Buy or Rent? |
|---|---|---|---|---|
| Indianapolis, IN | $285,000 | $1,400 | 16.9 | Borderline buy |
| Columbus, OH | $320,000 | $1,500 | 17.8 | Borderline |
| Charlotte, NC | $380,000 | $1,650 | 19.2 | Lean rent |
| Denver, CO | $565,000 | $2,100 | 22.4 | Rent favored |
| Los Angeles, CA | $850,000 | $2,800 | 25.3 | Strongly rent |
| San Francisco, CA | $1,200,000 | $3,500 | 28.6 | Rent clearly better |
The national median home price in 2025 is approximately $420,000. The national median rent for a comparable property: approximately $2,100/month ($25,200/year). National P/R ratio: 16.7 — solidly in the 'analyze carefully' zone, meaning the answer varies significantly by individual market and timeline.
P/R Ratio Limitations
The P/R ratio is a screening tool, not a complete analysis. It ignores: mortgage rate (higher rates worsen buying math), expected appreciation (markets with higher appreciation tolerate higher P/R), your specific down payment (opportunity cost varies), tax situation, and how long you plan to stay.
Go Beyond the Ratio — Run the Full Analysis
The calculator shows the complete 10-year picture for your specific market.