Price to Rent Ratio Solution

STEP 0: Pre-Calculation Summary
Formula Used
Price to Rent Ratio = Median Home Price/Median Annual Rent
PTRR = MHP/MAR
This formula uses 3 Variables
Variables Used
Price to Rent Ratio - Price to Rent Ratio is a real estate metric used to compare the relative affordability of buying versus renting a property.
Median Home Price - Median Home Price is the middle value of all home prices in a given area, with half of the homes priced below and half priced above this value.
Median Annual Rent - Median Annual Rent is the middle value of all rent prices in a given area over a year, with half of the rental properties priced below and half priced above this value.
STEP 1: Convert Input(s) to Base Unit
Median Home Price: 2700000 --> No Conversion Required
Median Annual Rent: 162000 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
PTRR = MHP/MAR --> 2700000/162000
Evaluating ... ...
PTRR = 16.6666666666667
STEP 3: Convert Result to Output's Unit
16.6666666666667 --> No Conversion Required
FINAL ANSWER
16.6666666666667 16.66667 <-- Price to Rent Ratio
(Calculation completed in 00.004 seconds)

Credits

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Created by Keerthika Bathula
Indian Institute of Technology, Indian School of mines, Dhanbad (IIT ISM Dhanbad), Dhanbad
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Verified by Vishnu K
BMS College of Engineering (BMSCE), Bangalore
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Price to Rent Ratio Formula

Price to Rent Ratio = Median Home Price/Median Annual Rent
PTRR = MHP/MAR

What is Price to Rent Ratio ?

The price-to-rent ratio is a fundamental metric in real estate that compares the cost of buying a property to the cost of renting it. It's calculated by dividing the property's purchase price by its annual rental income. This ratio helps prospective buyers and investors assess whether it's financially advantageous to buy or rent a property in a specific market. A lower ratio suggests that buying might be more affordable, while a higher ratio may indicate that renting is a more economical option. The price-to-rent ratio is influenced by factors such as market trends, property location, rental demand, and financing terms, making it a valuable tool for making informed decisions in the real estate market.

How to Calculate Price to Rent Ratio?

Price to Rent Ratio calculator uses Price to Rent Ratio = Median Home Price/Median Annual Rent to calculate the Price to Rent Ratio, The Price to Rent Ratio is a real estate metric used to compare the relative affordability of buying versus renting a property, calculated by dividing the property's purchase price by its annual rental income. Price to Rent Ratio is denoted by PTRR symbol.

How to calculate Price to Rent Ratio using this online calculator? To use this online calculator for Price to Rent Ratio, enter Median Home Price (MHP) & Median Annual Rent (MAR) and hit the calculate button. Here is how the Price to Rent Ratio calculation can be explained with given input values -> 16.66667 = 2700000/162000.

FAQ

What is Price to Rent Ratio?
The Price to Rent Ratio is a real estate metric used to compare the relative affordability of buying versus renting a property, calculated by dividing the property's purchase price by its annual rental income and is represented as PTRR = MHP/MAR or Price to Rent Ratio = Median Home Price/Median Annual Rent. Median Home Price is the middle value of all home prices in a given area, with half of the homes priced below and half priced above this value & Median Annual Rent is the middle value of all rent prices in a given area over a year, with half of the rental properties priced below and half priced above this value.
How to calculate Price to Rent Ratio?
The Price to Rent Ratio is a real estate metric used to compare the relative affordability of buying versus renting a property, calculated by dividing the property's purchase price by its annual rental income is calculated using Price to Rent Ratio = Median Home Price/Median Annual Rent. To calculate Price to Rent Ratio, you need Median Home Price (MHP) & Median Annual Rent (MAR). With our tool, you need to enter the respective value for Median Home Price & Median Annual Rent and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
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