Homeowners looking to buy or rent (Not pictured); Empty Homes Florida — Courtesy: Shutterstock — Artazum
According to data from Florida International University and Florida Atlantic University, rent rates may continue to grow in South Florida.
Is it therefore wiser to buy or rent right now for people migrating to the Sunshine State?
One hundred of the major US housing markets were the subject of a monthly study by two Florida colleges to compare average home and rent prices and track changes over time.
The conclusion provides the big question: Which is better, renting or buying?
“Low price to rent ratio favors ownership. So now you are buying homes that are relatively low cost in terms of dollars and price, or one dollar in annual rent.”
Those who are currently in the market should adopt a buy-a-home-and-hold strategy, says Ken Howard Johnson of FAU.
“I mean, it’s costly to live here, but I think the financial opportunities are here, the professional opportunities are here. When I moved here 20-something years ago, I was floored at the cost of living, especially housing, but I was right to stay, and I think that people years down the road will feel the same,” shared Johnson.
There are a number of reasons why people are being encouraged to buy rather than rent. The primary one is a lack of housing options.
According to FIU professor Eli Beracha, the number of Americans has decreased by around 4 million, while demand has skyrocketed.
“And that problem is not going to change anytime soon. To build the housing that is necessary to keep up with inflation growth, and to keep up with the shortage, will take at least a decade,” stated Beracha.
It is the cause of the current high level of property prices.
According to researchers, there are no immediate plans for it to decrease; instead, it will likely remain unchanged.
According to Beracha, there are now very few transactions in South Florida since neither buyers nor sellers are motivated to complete contracts.
But before the market becomes much more competitive, purchasing now is still your best option.
“People think about the risk of, oh, I am going to buy a home, and maybe prices will go down, and that is a big risk. I don’t think that’s going to happen, but I see how people would think so. To me, much more of a risk is what happens if you rent, prices will continue to go up, and I think they will continue to go up as soon as interest rates go down, and then it is being priced. Your rent is going to be higher; you won’t be able to buy a home, and you will be priced out of the Miami market.”
So how can you be certain that the choice you are making is sound financially?
According to Beracha, the price of a home should not exceed 40 percent of your salary, including all associated costs.
Johnson advised individuals who still want to rent to build a savings portfolio to aid them over the long term.
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Mike has more than 30 years of experience in marketing and public relations. He once owned his own agency and has worked with some of the largest brands in the world.
