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It’s often a question, even here, in the Hamptons, where seasonal rentals play a role in that question.

Even homeowners who don’t need to sell in today’s market are asking whether they should sell now, avoiding further loss of value in their homes, and rent until the market stabilizes.  While I think that might be a good idea in theory, unless you have a unique or extraordinary home or are willing are to sell  for a price reflective of the market in 2005, you may just be wasting your time and effort at this point.

But for traditional markets, David Leonhardt, writer for the New York Times suggests a formula for deciding whether to rent or buy.

Over the last several years, I’ve come to like a simple, back-of-the-envelope way to compare the costs of renting and owning. You find two similar houses, one for sale and the other for rent, and divide the sale price by the annual rent. You can call the result the rent ratio.

Click the link for the whole story.

As Home Prices Drop Low Enough, a Committed Renter Decides to Buy

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