From Forbes:

Are you a renter who's been waiting on the sidelines for your opportunity to buy when prices hit bottom? Before you jump in, figure out your city's "capitalization rate."

That's the annual rent a house would generate in your market, minus property taxes, insurance and other expenses, divided by purchase price. the number you get is roughly equivalent to a bond yield. If the cap rate in your city is high – say 5% - it's time to explore a purchase. If it's low – say 3% -- keep on renting. We spot-checked cap rates in more than a dozen neighborhoods in some of the biggest cities in the U.S. Here's what we found…

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