Buying a home in South Florida trumps renting, new study finds
02/20/2014 1:00 AM
02/20/2014 8:10 AM
To rent or to buy is a perennial debate for those mulling their housing options.
It’s still cheaper to buy a home than to rent in Miami-Dade and Broward counties, despite the double whammy of sharply rising home prices and mortgage rates, according to a new housing affordability study by RealtyTrac.
But the math advantage of buying is shrinking.
In Miami-Dade, the monthly house payment jumped 29 percent to $790 a month in the fourth quarter of 2013 from $614 a year earlier, according to the Irvine, Calif.-based data firm.
Those figures are based on a 30-year, fixed-rate mortgage, insurance, taxes and maintenance on a median-priced, three-bedroom house, after subtracting the income-tax benefit.
Renting a comparable three-bedroom house in Miami-Dade last year cost $1,539 a month, RealtyTrac said, using the average fair market rent for the area set by the U.S. Department of Housing and Urban Development.
For Broward, the monthly payment on a median-priced house rose 31 percent to $912 in the fourth quarter of 2013 from $695 a year earlier. The big spike was due to an increase in the median home price coupled with higher mortgage rates.
Even so, that was well below the $1,763 a month cost of renting a similar house in Broward, RealtyTrac said.
The median home price rose 17 percent to $166,000 in Miami-Dade and 19 percent to $191,500 in Broward in the fourth quarter of 2013 from a year earlier, according to RealtyTrac.
The study underscores the divergence emerging in the housing recovery: Home-ownership costs, based on sales prices and interest rates, have risen far more than median household incomes.
“The monthly cost of owning a home is still less than renting in the majority of markets,” Daren Blomquist, vice president of RealtyTrac, said in a statement. “But the cost of financed homeownership is becoming dangerously disconnected with still-stagnant median incomes, driven not by shoddy underwriting practices this time around but by investors and other cash buyers who are not tethered to the typical affordability constraints.”
For Miami-Dade, the minimum qualifying income needed to buy a median-priced home in the fourth quarter of 2013 was $37,942, up from $29,478 a year earlier. For Broward, the minimum income needed jumped to $43,771 from $33,359. The study assumes no more than 25 percent of household income is used for a monthly house payment.
Buying came out cheaper than renting in 296 out of 325 U.S. counties analyzed in the study. Counties where renting was less expensive than buying included San Francisco, Orange, Santa Clara, Alameda and Ventura in California, and Suffolk and Westchester in the greater New York area.
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