Owning a home has many benefits, including tax breaks and the potential to build value, plus mortgage payments are often lower than rent for a comparable home — especially over the long term. But in some cities, rent can be so high that it’s difficult, if not impossible, to save the recommended 20% down payment.
Luckily, a study done through USA Today and Zillow of large metropolitan areas shows that the Tampa area is definitely advantageous for home buyers. This chart below compares different cities and the average percentage of monthly income needed for rent vs. a mortgage.
Great news for a lower monthly payment, but there are other barriers of entry. Tampa Bay area home prices surged more than 14 percent last year – the biggest year-over-year gain of any major metro area in Florida. 2017 so far has been a strong year for home sales as well, leaving available homes scarce and seller’s prices much higher.
WFLA sat down with Mortgage Loan Originator Brian Hiatt of Movement Mortgage to determine if you’re going to be living in a home for less than 3 years in the Tampa area, it makes more sense to rent. For most situations, it will cost more
Using a formula to analyze the Tampa area, factoring in variables such as a down payment of 3 percent, market appreciation of 3 to 4 percent, and a minimum of 3 years in a home, Hiatt recommends buying for residency of more than 3 years especially if you’re looking at homes priced up to $300,000.
Some other considerations when buying or renting:
Renting – Pros:
- Flexibility in time/location
- Not locked in past your lease term
- Landlord responsible for maintenance
Renting – Cons:
- Typically more expensive for the same size/type of dwelling
- Rent can go up every year
- Upfront costs often include a security deposit and first/last months’ rent
- Landlord can sell the property
- Typically not much control over decorating/improvements
Owning – Pros:
- Typically costs less per month than renting
- Builds equity
- Historic average appreciation of 3 to 4 percent
- Income tax savings – you can itemize and deduct property taxes and percentage paid. Also, there are possible additional tax savings for first-time home buyers through the Florida Housing FTHB Tax Credit
- You decide how long to stay
Owning – Cons:
- Down payment can be tough to save for (although there are FTHB programs available for qualified applicants)
- Maintenance is your responsibility