The latest rent ratios were released by Moody’s and can be seen in this New York Times article, giving support to the argument that in South Florida at least it is looking like it is more worthwhile to buy than to rent in today’s market of depressed home prices.
The rent ratio is the purchase price of the property divided by the annual cost of renting that property. The premise is that if the ratio is more than 20 (as in New York City for example), it is a better economic decision to rent. When the ratio is less than 15, the advantage tilts to owning. Between 15 and 20 is up in the air, but of course these ratios do not take into consideration potential price appreciation.
Because of the low prices and amazing opportunities in the Boca Raton, Delray Beach, and Highland Beach real estate market, I believe that now is a great time to buy. An average Boca Raton Florida house that would sell for $500,000 (which used to fetch closer to $1,000,000 just four years ago!) would rent for approximately $3500/month. This would be a rent ratio of under 12% which according to this theory would heavily favor buying over renting. So for those of you sitting on the sidelines, wondering if it makes sense to plunge into this market, I say now is a great opportunity. Prices and interest rates are very attractive; this is really a great time to buy!
What do you think? Please comment and get the discussion going. Are you willing to dip your toes into the Boca Raton FL real estate market, for a residence or as an investment? If not, what is holding you back?
Gloria Singer is the Broker of Boca Expert Realty, a boutique Boca Raton real estate company with a focus on professional service and an unparalleled customer experience. Our select agents are amongst the top performing professionals in the field. Visit www.BocaExpert.com for information on Boca Raton, Delray Beach and Highland Beach real estate and to connect with an expert in the local market.