It takes a little more than two years for buying to beat renting in South Florida, a new report shows.
Buyers in the Florida region will realize the financial benefits of buying a home instead of renting it in 2.4 years, according to real estate website Zillow.com.
“If you know you’re going to be in one place for 2 1/2 or three years, it makes sense to buy a home,” said Aaron Terrazas, a senior economist for Seattle-based Zillow.
However, buyers also must consider how easily they can qualify for a mortgage and save for a down payment, Terrazas said. What’s more, finding an affordable home could be a challenge, given the limited supply of available properties, he said.
Eli Beracha, a professor of real estate investment at Florida International University, said consumers also should consider the expected return if a renter invested the money that would have gone to buying the home. “Buying a home is much more complex than just looking at how long you plan to stay there,” Beracha said.
The South Florida break-even figure is slightly higher than the national average. Across the country, buyers need 1.8 years before buying makes more sense than renting.
Among the nation’s 35 largest metro areas, South Florida has the 10th-longest timeline, Zillow said. Indianapolis has the shortest at 1.2 years.
Slower rent growth and home value appreciation are the primary reasons why South Florida’s break-even number is higher than the national average, Terrazas said.
Zillow said its analysis included all possible costs in buying a home and those incurred when renting the same property, including up-front or down payments, closing costs, estimated monthly rent, mortgage payments, homeowner association fees, insurance, taxes, utilities and expected maintenance.
A rule of thumb is that it takes five to seven years before buying beats renting, said Jack McCabe, a housing consultant in Deerfield Beach.
Still, for many people, renting is always the better option because they prefer the freedom of moving easily for another job, McCabe said. Also, they want to avoid unexpected major expenses, such as a leaky roof or a broken air conditioner. “That doesn’t cost you a nickel if you’re renting,” McCabe said.
The Zillow report ranked the San Antonio, Texas, metro area as the nation’s “sweet spot” for housing. San Antonio has strong income growth and a good job market, and buyers can break even on a home in just more than a year, Zillow said. Nashville, Tenn., Tampa, Jacksonville and Raleigh, N.C., rounded out the top five “sweet spot” regions.