For most renters – or anyone, really – the thought of moving is rarely an enticing one: it takes work, money, time and energy. But in every real estate market cycle, there comes a time when your best option as a renter is to move, and that time is when it’s cheaper to buy than to rent. And as it so happens, that time is now.
The ever-rising prices for homes compounded by flat or lower rents are changing the rent-versus-buy equation in America’s biggest housing markets.
In fact, Trulia did the math and calculated the financial cost of renting versus buying. Assuming that households stay in their home for seven years and can afford to put 20 percent down and secure a 30-year fixed rate mortgage when buying a home, they determined it’s cheaper to buy than rent in all of the 100 biggest U.S. metro areas – with the Tampa-St. Petersburg market making the top 15.
And for many renters and prospective renters in the Tampa-St. Petersburg market, that should come as no surprise. St. Petersburg has experienced the third highest rent increase in Florida, with Tampa, Clearwater and Brandon also making the top-20 list of Florida markets where rent has increased this year over last.
The buying market is so hot, in fact, that while previous guidelines suggested that a fifth of your income – or around 21 percent – could afford a median-priced home, it now only takes 16 percent.
Conversely, it has typically been suggested that about a quarter of your income could afford a home priced at the midpoint but now, it takes roughly 30 percent. That means it could potentially cost renters nearly twice as much to rent rather than buy.
And it’s not just the Tampa-St. Petersburg market experiencing a real estate surge.
Nationally, home prices have been tracking steadily higher over the past four years while rent has also increased. Previously, rent and home values moved in tandem but now, shifts in the rent-versus-buy decision are largely driven by changes in mortgage interest rates.
Still undecided? Consider these pros and cons for renting vs. buying from WFLA News Channel 8:
Renting – Pros:
- Flexibility in time/location
- Not locked in past your lease term
- Landlord responsible for maintenance
Renting – Cons:
- Typically more expensive for the same size/type of dwelling
- Rent can go up every year
- Upfront costs often include a security deposit and first/last month’s rent
- Landlord can sell the property
- Typically not much control over decorating/improvements
Owning – Pros:
- Typically costs less per month than renting
- Builds equity
- Historic average appreciation of 3 to 4 percent
- Income tax savings – you can itemize and deduct property taxes and percentage paid. Also, there are possible additional tax savings for first-time home buyers through the Florida Housing FTHB Tax Credit
- You decide how long to stay
Owning – Cons:
- Down payment can be tough to save for (although there are FTHB programs available for qualified applicants)
- Maintenance is your responsibility
And if all that is still not enough to convince you, try using Trulia’s Rent vs. Buy Calculator to do the math for yourself to compare the net costs of renting vs. buying – including opportunity cost, tax breaks, and more – to help you decide your next best move.
So, think you’re ready to take the homeowner plunge? Call us today to let one of our experienced agents guide you every step of the way until you find the perfect house to call home.
Because at DeLeon Sheffield Company, ‘We’re More Than Realty; We’re Family.’
