Why Buying Beats Renting in South Florida
Real Estate website zillow.com recently conducted a study comparing the costs of buying a home to the costs of renting the same property. The study took into account down payments, closing costs, monthly rent, mortgage payments, HOA fees, insurance costs, taxes, utilities, and maintenance expenses. When all was said and done, they found that after 2.4 years the costs of buying a home would break even with those of renting in South Florida.
This may come as a surprise to many people, especially those who are still scarred from the most recent housing crisis. However, owning a home is often a much better financial decision than one might think. In fact, many people are discovering that they can actually buy a bigger home than they can rent and still pay less than they would for that rental
Although South Florida’s home prices are appreciating, increasing rental rates combined with low mortgage rates are making home ownership much more appealing. Median gross rent in Palm Beach, Broward and Miami-Dade counties is $1,150, while the national average for metropolitan areas is $970. This makes South Florida one of the more expensive rental markets in the country.
Should You Buy a Home?
If you know that you are going to live in the same place for at least two and a half to three years, the benefits of buying a home far exceed those of renting. One of the main benefits of homeownership is that over time, as your mortgage balance decreases, you will build up equity. Homeownership provides for tax deduction benefits as well. One tax benefit is a mortgage deduction, which allows homeowners to deduct the mortgage interest from their tax obligations. In the early years of owning a home, interest payments tend to be the largest portion of a mortgage payment, so this deduction can be sizable. Other deductions include real estate taxes, homeowner’s insurance and a portion of your utilities if you work at all from home. Additional benefits include fixed payments during ownership, presuming financing with a fixed rate mortgage (unlike rent), which could be increased by the landlord each year and the ability to make improvements, increasing value and equity.
At Stein Posner, our South Florida real estate agents know the market better than anyone, and are always ready to help you find the perfect home for your needs. For more information, give us a call today.