Why are property price-to-rent ratios relatively low in the US?

Question

I am looking at the data here (for 2015). There are data for 489 cities from around the world, of which 82 are in the US.

• Using the measure "Price To Rent Ratio Outside Of City Centre", 69 of the 82 US cities are in the bottom 125 of all cities (roughly the bottom quartile) and the highest-ranked US city is Santa Barbara, CA at #206.

• Using the measure "Price To Rent Ratio City Centre", 67 of the 82 US cities are in the bottom 125 of all cities and the highest-ranked US city is again Santa Barbara, CA at #147.

What might explain why the property price-to-rent ratio in the US is relatively low, when compared to the rest of the world?

Answer 1

Reviewing their methodology, they make a number of assumptions that will affect their results. They don't provide the sources of the data they use as inputs, so it's impossible to fully evaluate their methodology, but it is worth noting their description:

Price to Rent Ratio - is the average cost of ownership divided by the received rent income (if buying to let) or the estimated rent that would be paid if renting (if buying to reside). Our formula to estimate rent per square meter assumes 1 bedroom apt has 50 square meters and 3 bedroom apartment has 110 square meters. It doesn't take into account taxes or maintenance fees.

Given the relatively simple assumptions, lack of transparency regarding input data, and reliance on assumed homogeneity in housing stock both internationally and intra-city, I wouldn't rely on these data to arrive at any conclusions, let alone the conclusion that price-to-rent ratios are particularly low in the US.