As home prices decline, should you rent or buy?
June 12th, 2007
Home prices are declining or at best remaining flat throughout Florida and if you’re relocating to Florida you have to consider whether renting or buying is best for you.
There are signs of a rental buyers market appearing throughout many Florida real estate markets with some apartment occupancy rates hovering around 60-70%. This is apparently being caused by an unsold inventory of homes that are now available for rental. Therefore renting is extremely affordable right now when you consider the monthly cost and compare it to paying a mortgage, taxes and insurance. In the Florida Spacecoast area, a beachside rental of a home can typically cost around $1500 per month. That same home may also be for sale and with a mortgage, taxes and insurance, could cost you over $3000 per month, and that’s after a 20% down payment. Throw in maintenance and salty air from the ocean and you can see how renting can be a bargain.
Florida is also in the midst of an insurance crisis with high insurance rates from hurricanes that battered real property in recent years. The largest insurer in the state is Citizens, which is underwritten by the State of Florida as many insurers have cut back on exposure or even pulled out completely. Property taxes have also risen sharply in recent years as home prices hit unrealistic highs, however Governor Christ and the Legislature are currently working on a plan to lower property taxes.
So if you really want to paint the walls with murals of clowns at the circus and have non-earth tones colors for floor coverings and you’re looking to remain in one place for a long time, maybe buying is right for you. But if you’re looking for an investment, buying a home in Florida may not be a good investment in the near future. Until the monthly cost of owning a Florida home is reasonable to where the average wage earner can afford to pay the high mortgage, taxes and insurance, renting will remain the bargain for many Florida residents.
(Disclaimer; While I may be one of the best webmasters in Melbourne Florida, I don’t claim to know a whole lot about much else)
