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To rent or to buy right now in South Florida? Here’s what real-estate experts suggest

It may actually be slightly favorable to rent than to buy given the current market conditions in South Florida, according to recent data. Real estate experts weigh in. (Amy Beth Bennett / South Florida ֱ)
It may actually be slightly favorable to rent than to buy given the current market conditions in South Florida, according to recent data. Real estate experts weigh in. (Amy Beth Bennett / South Florida ֱ)
Abigail Hasebroock, ֱ reporter. (Amy Beth Bennett/South Florida ֱ)
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For the past several months, would-be homebuyers and renters alike have faced fluctuating market and economic conditions, most of which have given people nothing but tough financial decisions to make.

Many people wrangle with the question: Should I rent or buy in South Florida?

Right now, renting may actually carry more benefits for some people than buying in the region given the current market conditions, according to recent research.

But ultimately, that big decision must be made by considering a variety of factors, some of which may lend better to buying with others finding it better to be a renter. Real experts detail what’s spurring the current trends, and how people can identify what’s the best choice for them.

Here’s what to know.

Renting may be a bit more favorable — for right now

Florida Atlantic University’s College of Business houses several measures to analyze housing trends, including a tool called the , which tracks the largest housing markets in the United States, including the Miami-metropolitan area.

A higher “price-to-rent ratio” typically indicates that it would be less expensive to rent than buy, while a lower ratio means buying would more likely be smarter than renting. According to data from December, the actual price-to-rent ratio was 14.55, while the expected price-to-rent ratio was 13.5. Because the actual price-to-rent ratio is higher than what’s expected, that indicates renting may be more beneficial than buying at the moment, said Ken H. Johnson, a real estate economist at FAU’s College of Business.

The Miami-metro area, which includes Miami-Dade, Broward and Palm Beach counties, is seeing its highest price-to-rent ratio since March 2015.

“I think renting is a little bit more favorable at this point in time,” Johnson said. “Ask me 30 days from now, 90 days from now, where prices have calmed down a little bit then, it’s still pretty much a toss up, quite honestly.”

Whitney Dutton, the residential sales director for Native Realty, concurs with the notion that renting may be slightly advantageous in the current market conditions. This is because rents are slowly but surely coming down, and interest rates on mortgages for homes are staying high, Dutton said.

“Anything really above 5% is starting to make it more affordable to rent than it is to buy,” he said.

Right now, interest rates are hovering around 7%, Dutton said.

To illustrate the rather stark difference between a 5% and 7% interest rate, Dutton calculated theoretical monthly payments, before taxes, on a $500,000 home.

If someone were to put 20% down on that half-a-million-dollar property, they would pay $2,147 per month at a 5% interest rate.

With all else staying the same, if the interest rate bumps up to 7%, the monthly payment jumps to $2,661. That’s a $514 difference each month, which amounts to more than $6,000 for the entire year.

Yet, while market conditions indicate a slightly better arena for renters, that doesn’t necessarily mean everyone should become one.

It all depends on your situation

Sure, there might be a slight advantage to renting in Miami, Johnson said, but people have to ask themselves what they are trying to do.

“If you love amenities, you probably want to lean toward owning at this point in time,” he said. “If you love the fact that you want to be highly mobile to capitalize on potential job opportunities, perhaps you need to be renting at this point in time.”

Dutton said he’ll often “get deep” with buyers to determine whether their unique situation calls for renting or owning.

He said he’ll ask a plethora of questions, including: Do they plan to move in the near future and if so, why and when? How much do they value a sense of security? Do they have children? How old are their children? Do they have pets? What kind of job do they have? Do they enjoy spending a lot of time at home, or do they travel a lot?

“What do you like to do on the weekends? Are you out and about? Do you travel? Are you gone three weekends out of the month?” he said. “We look at this survey that we take and we’re like, ‘Look, it seems like you spend a lot of time at home. Would that be right? Yes or no? Yes, it is. OK, cool. And it seems like if you had your way, sometimes you would just have a nice relaxing weekend at home without doing anything. And that’s what you like, and if that’s the case, then this next home is more than just a line item on a budget.'”

Dutton said an element of psychology often plays a role, too, where perhaps societal norms place pressure on people in wanting to buy rather than rent.

“There’s a level of hierarchy,” he said. “Because wealth, a lot of times, is categorized together with real estate.”

But with problems — such as steep grocery bills and tight incomes — plaguing many families in not only South Florida but the rest of the United States, renting may be the only option, even if owning is desired.

Dutton encourages renters to be emboldened and negotiate with landlords for incentives, such as a cheaper monthly payment. Dutton also recommends being prepared with completed applications with information such as credit score, W-2s and place of employment.

“The cleaner package you give a landlord, the better negotiating power you’re going to have,” he said.

Taking extra steps such as those could be the difference between paying $2,800 a month and $2,500 a month, Dutton said, because landlords typically want convenience over cash.

Ultimately, both Johnson and Dutton would agree: While overall trends indicate a more renter-friendly market, each person’s situation is different and should be treated as such.

You might want to settle down in South Florida for the next 10 years, in which case buying could be better, but ultimately, if you value the convenience of putting in a maintenance request to a leasing office to unclog a shower drain or kill a cockroach over anything else, renting might be better for you after all.

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