Trulia looks at homes for sale and for rent and calculates the average rent and sale price across all listed properties in a metro area. The Texas coast is in the Green.
Then, Trulia factors in the total costs of homeownership (e.g., closing costs, maintenance, insurance, taxes, etc) and total cost of renting (e.g., renter’s insurance and security deposit).
The starting assumptions are that a prospective homebuyer can get a mortgage rate of 4.5 percent, itemizes their federal tax deductions, is in the 25 percent tax bracket, and will stay in their home for seven years.
People in the 35% federal income tax bracket are also assumed to pay 5% state income tax.
To account for the opportunity costs, Trulia calculates the net present value of the payment streams for renting and owning. Circles are sized proportionally by population.