HotPads has introduced an exciting tool for housing shoppers trying to navigate today's housing market: Rent Ratio Heat Maps.
Our Rent Ratio Heat Maps, combined with our Rent vs. Buy Search, and Foreclosure Heat Maps, give consumers the tools necessary to make sound financial and housing decisions in today's volatile marketplace.
Our unique platform for juxtaposing actual for sale and rental listings with information allows shoppers to see how their target property compares to the surrounding area.
This functionality helps housing shoppers make more informed decisions of whether renting or buying will leave them better off financially.
Rent Ratio Heat Maps
The Rent Ratio is an indicator of the stability of home prices, and these Rent Ratio Heat Maps have effectively made HotPads the first to produce an interactive map of the housing bubble.
HotPads' Rent Ratio Heat Maps allow apartment and housing hunters nationwide to visually see where it makes sense for them to rent or buy, based on the ratio of rental and for sale pricing.
If the ratio is too high (generally above 20) it is more expensive to buy than rent comparable homes.
On the Heat Maps, the Red colors indicate areas where it makes more financial sense to rent, while the blue swatches are areas where it makes more sense to buy.
(Red = Rent) (Blue = Buy)
Calculating Rent Ratios
To generate these maps, we analyze over 400,000 rental properties and 4 million for sale property by state, county, ZIP, and number of bedrooms and then calculate the average rental and sale prices for that size home in that particular area. The by-bedroom rent ration are then averaged, weighted by the number of listings, into the final rent-ratio for the area.
In short, the Price-Rent ratio is calculated by dividing an area's median house price by annual rent (Median House Price/Annual Rent )