Study suggests buying over renting in Tampa

The rent-versus-own debate rages on, but at least one affordable housing group suggests it's probably better to buy than to rent in Tampa.

The National Low Income Housing Coalition and the Center for Economic and Policy Research evaulated the nation's 100 most populous cities. It grouped Tampa among 66 metro areas where buying will make you wealthier than renting through 2012.

According to the data, a person who bought a lower-cost 3-bedroom home in Tampa this year could expect to accumulate between $38,000 and $42,000 equity in his home within four years.

The other 34 metro areas, including Miami-Fort Lauderdale and Cape Coral-Fort Myers, were ranked as places where renting was the best option through 2012.

Study author Danilo Pelletiere stressed that home ownership should be considered a conservative investment, not a get-rich-quick scheme.

And Pelletriere's formula holds only if you can get a 3-bedroom home for 75 percent of the median price, which in the Tampa area probably means finding a place for about $150,000.

This makes sense to me. While prices will likely drop through 2009, buying low now will likely pay off by 2012. If you can land a short sale deal, your gain will be even greater in 4 years.

Comments

[Tino]

Their study makes the assumption that principal, interest, property taxes, maintenance and insurance per month for that house costs only $1,150.

I guess it's the "Low Income Housing Coalition" for a reason. This is exactly why people continue to be thrown out on the street. If you make these kinds of terrible financial assumptions you are going to remain poor.

[yyyy]

?????????

[Alex]

Some of you probably have this bookmarked already, but anyway, here's a great tool from the NYT that shows whether or not it's better to rent vs buy:

http://tinyurl.com/2jgeu8

[Kevin Sandridge]

Hey James - just read this article and have a complimentary post on my site. Tracked back to you.

The report was fascinating.. and a bit troublesome for friends of mine in the business in the Miami area and in other parts of the US facing negative equity for 2011. MAKES ME MAD that we're facing this, but it is what it is - and we have to work through it!

Keep up the great work, and I'll follow along via Google Reader! By the way - am heading over to Las Vegas for the 2008 REBlogworld Expo... any chance you'll be there? If not - would like to meet up sometime to chat about blogging for our industry. Always nice to connect with like-minded folks.

Take 'er easy, and enjoy the weekend.

Many thanks,

Kevin Sandridge

PS - Check out http://madmortgageworld.com for some truly innovative Mortgage Marketing and Social Networking stuff... you'll be glad you did!

[Fuzzy Bear]

but at least one affordable housing group suggests it's probably better to buy than to rent in Tampa.

In the overall Tampa market, renting is still the better option until the market corrects. I agree, low end homes may be looking more attractive to purchase than to buy, but that is where it ends.

The mid to high end range still looks more attractive to rent short term than to purchase. The reason is the local market is flooded with rental homes of properties that were not selling due to the high sales cost.

However, in due time the rental costs and ownership costs will come closer together and thus owning will be more attractive then renting.

[Fuzzy Bear]

I don't think it's the buyers!

You would be correct Tino.

Analysts at Credit Suisse estimate that the S&P Case-Shiller Index of house prices in 20 major cities must fall by another 14 percent for houses to become affordable again, assuming the typical mortgage rate stays around 6.32 percent.
The index was down 15.8 percent from a year earlier in May.
If borrowing costs eased to 5.5 percent, the Case-Shiller index may have only another 7 percent to fall, Credit Suisse said, but if rates rise to 7.5 percent, house prices may tumble another 24 percent.
It is a similar story in Florida.
Real estate market analyst Jack McCabe, of McCabe Research & Consulting in Deerfield Beach, Florida, said regions such as Miami, Orlando and Tampa were looking at another 15 to 20 percent drop.