Think of the buy-versus-rent relationship as akin to a price-earnings ratio for stocks. The housing ratio rises as rents fall, home prices climb, or both. Some markets sport historically high–maybe dangerously high–ratios. The P/E in Miami, where p is the median mortgage payment and e is the median apartment rent, has spiked from approximately 13.5 in 2001 to 24.3 in the summer of 2006.
Other similar markets: Boston, Los Angeles, Las Vegas, Phoenix, and Washington, D.C. Until these housing P/E ratios revert back to a more normal range (the national average is 15 ) you may find renting a bargain. These types of markets force homebuyers to take a hard look at their motivations for buying.
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Tim Ryan 
