Great News for Investors: Renting a home better than buying

Renting a home in South Florida beats buying one — assuming you’re a disciplined investor. That’s the conclusion of the Beracha, Hardin & Johnson Buy vs. Rent Index, a housing barometer developed by professors at Florida Atlantic and Florida International universities.

The quarterly index looks at wealth creation, determining whether it’s more advantageous to buy and build equity or rent the same property and invest the money that would have been spent on a down payment and other costs of ownership. Renting has topped buying for about two years in South Florida, largely because stock market gains have outperformed home-price appreciation.

Still, buying is a good financial decision for many people, including families who want to put down roots and gain access to good school districts. The market is not in any danger and real estate experts are not worried about prices.

Americans traditionally have built wealth through buying homes, but ownership began to lose its luster as prices plummeted in South Florida and across the nation during the housing bust from 2006 through 2011. More people appreciate the flexibility that renting offers and think it’s less of a risk than owning, but many renters wouldn’t invest their savings, so buying is the better option for them.

Aside from South Florida, other metropolitan areas that favor renting include Pittsburgh, Portland, Ore., San Francisco and Seattle. Buying beats renting in 15 of the 23 areas surveyed, including Chicago, Cleveland and Cincinnati. Home prices are increasing too fast in Dallas, Denver and Houston, the only three urban areas in which renting is much better than buying.

To learn more about the South Florida real estate market for rental home investors, contact an expert member of the 9 Core Realty team today!

 

 

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