By now, it is old news that home prices have increased drastically in the past two years. The state of Florida has seen its fair share of rising median home prices. However, despite these sharp increases, market rents in some places, (including Florida) have outpaced home prices. And it’s outpacing by enough to make potential renters consider if buying may be the more affordable option.
The national median rent price rose 19.8% in January when compared to a year ago. This marks the eighth straight month of double-digit increases. Based on a report from Realtor.com, the national median rent in the US in January this year was $1,789. Realtor.com Chief economist, Danielle Hale, explains that rent markets are “making up for lost time during the pandemic”. Overall, rent in the US has gone up 21% since the start of 2020.
Top Markets for Rent Increases
Some of the largest increases are being seen in the Sun Belt area. In Florida, we have seen increases outpacing most of the country. For example, in Miami-Fort Lauderdale-West Palm Beach, rent prices are up 52.4% from last January 2021 (median is $2,895 a month). The Tampa-St. Petersburg-Clearwater area has seen a year-over-year increase of 37.5% (median $2,070) and the Orlando-Kissimmee-Sanford area has seen a 34.8% increase (median $1,820).
Top Markets that Favor Buying vs Renting
In many cases, these rental increases are larger than those seen on the home buying side. You can see from Table 3 below that Orlando has taken the number 8 spot of the top ten markets that are currently favoring buying over renting. Tampa has taken the number 9 spot. On average in Orlando, buying a home will cost 27.1% or $493 a month less than renting. In Tampa, it’s 25.5% or $527 less. Tampa’s per month savings is higher because the percentage is out of higher median rent costs.
There are markets that currently favor renting over buying such as in New York City, Los Angeles, Boston, and others you can view on Realtor.com. However, nothing in Florida is currently landing itself in this category.
What does this mean for you?
The rent vs buy decision is a tough one that will depend greatly on your individual circumstances. In Florida, it’s also important to consider the possible costs of Home Owners Associations Fees or similar community fees. Mortgage interest rates should also be taken into consideration. While rates are currently the lowest we have seen in a while, experts are expecting them to increase. If you don’t have a large enough down payment, you may need to factor Private Mortgage Insurance (referred to as PMI) into your monthly costs. Your financial situation and how long you plan to live in your home is also a consideration. While home equity is expected to rise an estimated 31.8% over the next five years, if you only plan to live in your next home a year, buying may not benefit you. The size of the home you need as well as location can also change the outcome of buying vs. renting. These are all things you should consider as you decide if buying or renting is your next best move.
Regardless, the numbers above don’t lie and with the predicted gains in equity over the next few years, home buying is definitely worth a big consideration.
If you want to purchase a home this year, let’s connect so you have an ally to help you navigate the process. Our Moving to Orlando REALTORS are here to help you prepare for your home purchase. Take a moment to fill out our contact form, and someone will be in contact with you!
