To rent or to buy? What is the best at this time?

To rent or to buy? What is the best at this time?

We want to advise you, and we want to advise you well…

This moment of economic reactivation makes us think that it is more affordable to rent than to buy; even more so with how difficult it has become to find cheap places to live in South Florida.

And indeed, at this moment it is more affordable, for example, to rent a three-bedroom apartment at the average cost; than to own a house, if we look at it in relation to the salaries of a person per month.

The explanation is very simple

The prices to buy housing are increasing much faster and in higher percentages; than rents and salaries, however, salaries are increasing faster than rents; that is why during the last years housing prices have increased to values never seen before.

Today we estimate that a worker must spend an average of 45% of his income to pay the rent of a three-bedroom property, while to pay for the same property, he would be using up to 55% of his income, which generates anxiety and does not allow him to invest with the tranquility of before.

The percentage differences are very high

This statistic is being experienced in different percentages throughout Florida, but in any case; the percentage differences between buying and renting always exceed 5 points; unlike the rest of the country, where the differences are not so high; this has led to almost 60% of people in other states, preferring to buy rather than rent.

However, throughout Florida and in metropolitan areas of highly populated cities in the rest of the country, such as Chicago, Los Angeles, New York and Dallas, the phenomenon is completely the opposite; it is becoming more affordable to rent than to buy.

This trend will continue to affect the majority of South Florida residents, where we expect rents and home prices to continue to rise.

Is renting really the easiest option?

It is not really that easy to give an answer to this question, some say that buying will always be better in the long run; but it is one thing to say it and another to be able to do it, we have seen many tenants, who are potential owners; stay out of the market before being able to get the right property for their needs and budget.

The situation is that as long as we remain in the middle of such a turbulent market, without clarity between buying or renting; the opportunities to choose will be less and less, so if you find an option that allows you to be an owner investing the same as a rent; what do you think should be your decision?

As we can see, salaries have not increased at the same rate as the cost of housing; these on average have only risen by 3.5% each year; while renting averages rises of up to 35% and owning up to 30%; which leads to the average household not having the resources to enter the market.

So, when should I avoid renting?

The way rents are increasing, buying would be the most advisable alternative in the long term; but this will depend on the situation of each family, if they are going to stay for periods longer than two years, it would be better to buy; interest rates are low, the price of your property will continue to rise; many property costs are fixed, and it will always be better to pay for your own, to accumulate wealth.

In addition, with the volatility of the market, you would avoid having to pay more and more for rent; or having to find a decent place to live and according to your ability to pay, which is becoming more difficult every day.

We have seen how people who have lived in a house for several years, have had to leave their places; because they do not have the resources to stay in those areas, where the rent has been increased by more than 40%.

Renting has become impossible

In addition, with the market situation, many landlords are asking for up to six months’ rent in advance; up to three security deposits, plus application and study fees for not having the security of being approved.

However, these initial rental expenses are not the same as the down payment on a property; and although many have the monthly income and credit rating necessary, the biggest obstacle is not having the money for the down payment.

Before people could rent and save for the down payment of a property; now it is almost impossible with the costs of rents, these are more expensive than a mortgage; and this is perhaps the biggest incentive to make the effort to buy a home.

As always, if you have any doubts or want to learn more about this topic, contact us…

Call us at (305) 930-1160 or visit us at 605 Lincoln Rd Suite 250, Miami Beach FL 33139.