Despite the rising number of renters across the country, it is cheaper to buy a home rather than rent one in 72 percent of the 50 largest cities in the U.S., according to an index released by real estate search and marketing site Trulia.

"Since the start of the ‘Great Recession,’ many former homeowners have flooded the rental market. Following the principles of supply and demand, renting has become relatively more expensive than buying in most markets," said Pete Flint, CEO and co-founder of Trulia, in a statement.

"Though necessary for achieving true economic recovery, stricter bank lending practices have also further aggravated the struggling housing market in the short term. Even highly qualified homebuyers face intense scrutiny on their income, savings, existing debt and credit history before they can get a mortgage loan."

Trulia’s rent vs. buy index compares the median list price with the median rent on two-bedroom apartments, condominiums and townhomes listed on Trulia.com as of Jan. 10, 2011.

A price-to-rent ratio of 1 to 15 means that it’s much cheaper to buy than to rent in a particular city. A ratio between 16 and 20 means that it’s more expensive to rent than to buy, but, depending on the family’s situation, buying could "make financial sense," the site said. Any ratio above 20 indicates that owning is much more costly than renting in a city.

In 36 out of 50 of the country’s most populous cities, buying a two-bedroom home is less expensive than renting one. These cities include many areas that have been hit hard by foreclosures, such as Las Vegas, Phoenix and Fresno, Calif.

Top 10 cities to buy vs. rent:

Rank

City

State

Price to Rent Ratio

1.

Miami

Fla.

6

2.

Las Vegas

Nev.

6

3.

Arlington

Texas

7

4.

Mesa

Ariz.

8

5.

Phoenix

Ariz.

8

6.

Jacksonville

Fla.

8

7.

Sacramento

Calif.

10

8.

San Antonio

Texas

11

9.

Fresno

Calif.

11

10.

El Paso

Texas

11

Source: Trulia

In 10 cities, renting is cheaper, but buying might make more financial sense, according to Trulia. These cities include Los Angeles, Boston, and Fort Worth, Texas.

The index considers the total cost of homeownership compared to the total cost of renting. Calculations for the total cost of homeownership include mortgage principal and interest, property taxes, hazard insurance, closing costs at time of purchase, homeowners association dues, and private mortgage insurance. The homeownership cost calculation also includes tax advantages from mortgage interest, property tax and closing-cost deductions.

Calculations for total rental cost include rent and renters insurance.

The total cost of homeownership was highest, compared to the cost to rent, in New York; Seattle; Kansas City, Mo.; and San Francisco.

Top 10 cities to rent vs. buy:

Rank

City

State

Price:Rent Ratio

1.

New York

N.Y.

31

2.

Seattle

Wash.

24

3.

Kansas City

Mo.

21

4.

San Francisco

Calif.

21

5.

Memphis

Tenn.

20

6.

Los Angeles

Calif.

20

7.

Fort Worth

Texas

19

8.

Oakland

Calif.

18

9.

Portland

Ore.

18

10.

Albuquerque

N.M.

18

Source: Trulia

"Although owning a home is relatively more affordable in most cities, market conditions have caused an interesting demographic swap between traditional renters and buyers," said Tara-Nicholle Nelson, consumer educator for Trulia, in a statement. Nelson is also an Inman news columnist.

"For example, lifelong renters are seizing the opportunity to become homeowners while affordability is high. At the same time, a growing number of longtime homeowners are finding themselves tenants — some by choice and others by necessity."

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