Renting A House Is Cheaper Than Buying For Most Of The Country – Except in Cape Coral
Even though home prices have come down throughout most of the country, it’s still cheaper to rent, rather than buy. Unless you’re in Cape Coral. According to a study from FAU, “The Beracha, Hardin & Johnson National Price-to-Rent Ratios Monthly Report for January shows that homes still are selling for more than they should in 97 of 99 markets, an indication that renting is more favorable than homeownership. ”
The study shows that across the United States home prices are still too high and have more room to come down. Ken H. Johnson, Ph.D., a co-author of the report and an economist in FAU’s College of Business states “While rents also are on the rise, consumers are better off financially in most areas if they hold off buying until home price declines level off.” Although rent prices in most areas have come up, Johnson believes renters are better off waiting for further home price declines. Except in two markets. Springfield, Massachusetts and Cape Coral-Fort Myers.
The study shows that an extreme lack of supply in the rental market of Southwest Florida has driven up rental rates significantly. Partly because of the damage from Hurricane Ian. Also the influx of new residents. The construction of needed units will help bring the housing crisis under control, the researchers said. They aren’t saying that home prices won’t come down in Southwest Florida, they’re saying that the rent is so high right now that you’re probably still better off buying anyway. There’s a LOT of new construction that hopes to alleviate that.
But while both rent and purchase prices scream higher here in Southwest Florida, there is an additional point to be made.
Up until last week, mortgage rates were steadily climbing, making buying more costly. Then on Friday, Silicon Valley Bank collapsed and interest rates flipped. Today’s mortgage rates are actually the lowest they’ve been since December. Making buying even more attractive. Thus the dilemma.
Buy now and start building equity in your new home. Or
Wait and see if the market cools and you can get a better price.
The situation is incredibly volatile. There’s no way to know what’s going to happen next with home prices here.
At least there’s cookies.