Here’s what the experts and data suggests
As many South Floridians struggle to find affordable places to live, new data suggests that it might be more affordable to rent a property in Miami rather than buy a house in Miami.
According to information released by ATTOM, a provider of nationwide property data, it’s potentially more affordable to rent a three-bedroom apartment at median rent currently than to purchasing a home in Miami, relative to how much it would take of a person’s wages per month.
“Home prices are rising faster than both rents and wages, while wages rise faster than rents. And the housing market boom of the past decade keeps pushing home values to new records,” said Todd Teta, chief product officer with ATTOM.
For Palm Beach County, it would take 43% of the average worker’s income to afford the median rent for a three-bedroom apartment, compared to 52% of income to afford a three-bedroom home at median price, their data showed.
It’s similar throughout South Florida: In Broward County, 45% of the average wages would go to rent, compared to 49% going to housing costs. And in Miami-Dade County, renting a home in Miamiwould take up about 46% of average wages, while three-bedroom homeownership would require about 50% of average wages.
ATTOM looked at the median rents for three-bedroom properties in 2022, and the most recent average weekly wage data and home prices from January-November 2021. For about 58% of the country, they found that it was more affordable for people to buy a home than rent something.
That wasn’t the case in areas such as South Florida and more populated metros in the country such as Los Angeles County, Cook County in Illinois and Dallas, where ATTOM found that it was more affordable to rent a home in Miami than to buy a home.
But with rents and housing costs projected to keep rising, and most South Floridians priced out of the housing market and sacrificing to make ends meet, is renting a home in Miami really the more affordable option?
No simple answer
Local experts, however, say determining whether renting or purhcasing a home is more affordable is more complicated than that. Some say that buying a home in Miami is more affordable in the long run, while others point out that most renters and potential homeowners are priced out of the market before they even have a chance to get a place to live.
“It’s worthy of discussion when the market is somewhat more stable, but when you have a very turbulent housing market from both the homeownership perspective and the renter perspective, you aren’t even a player in the market and you don’t have much of a choice,” said Dr. Edward Murray, associate director with the Jorge M. Perez Metropolitan Center at Florida International University.
According to numbers provided by Murray, wages haven’t kept pace with the cost of homeownership. Average wages have gone up 3.5% year over year, compared to renter costs going up 36%, and homeownership costs have going up 30%.
“The average household could not afford to even be in this market,” he added.
The case against renting a home
Real estate agents argue that with the way rents are rising, buying a home in Miami could be the more affordable alternative in the long run, depending on a person’s circumstances. Taking advantage of low interest rates now, combined with building equity in a home, rather than paying money toward someone else’s property, could pay off.
“If you are going to be in an area for more than a couple of years, you might want to buy a home. A lot of your costs are going to be fixed as long as you can put the money down and afford it ,” said Jeff Lichtenstein, of Echo Fine Properties in Palm Beach Gardens.
There is also a volatility to the rental market as renters are facing dwindling supply and sharp increases, added Lichtenstein. A lot of landlords who owned rental units cashed out on their properties when they realized that the value of their homes was rising, leading to a shorter supply of rentals on the market.
“A problem for people in the rental market is they don’t have any equity. They have been in a place for five-plus years and all of a sudden their property rent in Miami is going up 40% and they are being forced to leave the area,” Lichtenstein said.
Additionally, the costs of renting can add up when factoring in having to come up with additional first, last and security when moving, especially in today’s housing market where some landlords are asking for up to six months rent up front, or two security deposits, real estate agent Roni Sterin with the Keyes Company added.
However, one of the biggest hurdles to homeownership is coming up with the down payment for a home, as people usually have the income and credit score necessary, noted Ken H. Johnson, real estate economist with Florida Atlantic University.
“It used to be that you could rent a condo in Miami and save a little bit for the down payment,” added Murray. “But now, rents are more than a mortgage and for a lot of people, they aren’t able to save. It’s frustrating.”
Written by AMBER RANDALL for the SOUTH FLORIDA SUN SENTINEL