Price-to-rent ratio

The price-to-rent ratio is home price ÷ (monthly rent × 12). It is a crude educational screen for whether buying looks relatively expensive or cheap versus renting in a market or for a property. Lower ratios are often described as more buy-leaning and higher ratios as more rent-leaning, but cutoffs vary and the ratio ignores mortgage financing, taxes, insurance, maintenance, opportunity cost, appreciation, and how long you stay. FinanceFlow’s price-to-rent calculator computes the ratio and a simple 5% rule proxy; use the rent vs buy calculator for a fuller net-worth comparison. Not financial advice.