The question of rent vs. buy is an age-old question. There are pros and cons to each, to be sure, but ultimately, the decision rests on the state of your lifestyle, budget, community and needs. It also depends on the county you’re moving to. The Miami Herald reports it’s cheaper to buy a home than rent if you’re looking in Miami-Dade and Broward counties, even though home prices and mortgage rates have been on the rise.
Doing the Math
That being said, the advantage to buying your own home in that area, indeed throughout all of Florida, is slowly decreasing as home prices continue their upward trend. The average mortgage payment in Miami-Dade, for example, jumped from $614 a year ago to $790 a month at the end of 2013, continues the Miami Herald. Take the same house and rent it, and you’ll see the monthly cost last year was $1,539 per month. Head on over to Broward County and you’ll see a similar scenario: a monthly mortgage rose a whopping 31 percent in the last quarter of 2013, up from $695 the previous year. However, keep in mind the cost per month to rent that same house in Broward was at $1,763. The cost of a home, as well as its corresponding interest rates, has outpaced the median household income.
Florida as a Whole
This state was one of the first markets to start slipping into the most recent housing crash, according to MSN Real Estate. Contrary to what analysts were hoping, Florida has taken a longer than expected time coming out of it. However, the prospects are now looking good for home ownership overall, especially for those who are looking to stay in Florida throughout the entire year. Snowbirds who only visit Florida during the winter months are also getting in on the deal. Vacation-home sales increased by seven percent in 2011 and are only expected to continue to rise, says Market Watch. Three in four vacation homes are purchased in the south, with a vast majority in Florida. Home buyers are citing increasingly good real estate deals as their reasons for settling down in that state. Of course, the weather doesn’t hurt either! Other southern states are experiencing high homeowner rates over renting, such as San Antonio, Texas, with a price-to-rent ratio of 10, according to Time. In Phoenix, Arizona, the foreclosure rates are sky high, with the only benefit being for home buyers looking to get a great deal off that surge of new renters.
Making a Decision
The best way to make a decision on renting vs. buying is to test the waters first. Consider renting a place a few times on vacation before making the plunge to buy. Things to consider in your decision include access to good health care, safe community, available activities, and income, property and estate taxes. In making a comparison between rent vs. buy, don’t forget to include all the numbers that come with home ownership, such as property insurance, home owner association fees and maintenance. That last one can be a doozy, as you’re in charge of fixing leaky pipes and broken appliances, plus you have to purchase new furniture and lawn mowers as a home owner that you wouldn’t if you were renting, points out U.S. News and World Report. When you rent, you don’t have to worry about all those repairs, which can be a big concern especially to the aging population. Another consideration for home buyers is the high price that rentals are capturing these days. With nine out of 10 buyers planning to rent out their property within the first year, 71 percent pf those people said they were attracted to do so by the high rental income that was possible, says Market Watch.
It’s important to explore the pros and cons of each option for your individual needs when tackling this big decision. The high price of renting comes with the peace of mind of no worries about home maintenance and upkeep. However, home ownership gives you a vested interest in your own property that can gain value over time.