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It Is Looking Like It Is Better To Buy Than Rent In Miami
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The question of whether it makes better financial sense to buy or to rent has been answered, at least currently for Miami and the rest of South Florida. A new real estate study has found that depressed luxury real estate values have allowed many middle-class workers the chance at home ownership. With a finite and dropping number of luxury homes available for sale and high demand for luxury apartments, rents are soaring and often at or even exceeding the cost of a mortgage. Some experts say that it is much better off on the home ownership side in Miami when you see how expensive the luxury rental real estate market has become.
Although the collapsed luxury real estate market took its toll on Miami's economy, it also did a lot to ease the problem of housing affordability. Landlords are taking advantage of those who are wary of buying into the beat up real estate market and the fact that mortgages are harder to get currently. They are increasing their prices and still able to rent their real estate. In 2007, someone in Broward had to earn $89,000 a year to be able to afford a $273,000 typical luxury home and just $42,000 a year for the $1,054 monthly rent a luxury two-bedroom apartment. That ratio has reversed as it now takes $35,000 a year to buy that same piece of luxury real estate and $49,000 to rent that apartment. The median price for a home has dropped to $130,000 and rents have climbed to an average of $1,236.
In Miami-Dade, the gap is a little closer. A Miami-Dade worker needs to earn about $43,000 to buy a house and $45,000 to rent. In 2007, the average rent was $1,018 a month in Miami-Dade and $1,122 now. The median price for a home went from $290,000 to $160,000.
In 2007, a Miami-Dade resident needed to earn about $95,000 in salary to buy a home that matched the median price of $290,000. Today, the median price is closer to $160,000 and someone only needs to earn about $43,000 to buy. Still, that is too high for low-paid workers. But, school teachers ($51,000), police officers ($50,000) or nurses ($41,000), currently have the opportunity to buy.
The study assumed the buyer would pay 10 percent of the home’s purchase price and assume the extra expense of mortgage insurance. Insurance and taxes are figured into the yearly cost of the real estate as well.
Across the country, Miami-Dade finished 36th in terms of the most expensive rent among 206 metropolitan areas. Honolulu was the most expensive, with monthly rent for a two-bedroom costing $1,833, and Wheeling, W.Va., was the least expensive with a monthly rent of $615. When it comes to housing affordability, Miami-Dade was 86th, a full 50 spots below its ranking on the rental list.
Broward is worse off when it comes to high rents, finishing 24th.
For Broward, the affordability gap is much larger. It was in the top 25 for rents and for purchasing a house its ranking plunges more than 100 places to No. 138 on the list, tied with Orlando and Oklahoma City.
Andres Leiser is a local contributor for Constec Realty's Miami luxury real estate website. Andres Leiser has been involved in Miami real estate for over a decade. For more information please visit http://www.constecrealty.com
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