Should Renters Become Homeowners in 2017 in Miami?

February 1, 2017

Whether you’re renting a mid-range apartment or a luxury condo, it may be time to become a homeowner in Miami. Even though the housing markets around the United States have recovered since 2008, some are still not sure if they should buy. However, this may be the time to buy, as the Federal Reserve may be increasing mortgage interest rates very soon.

Should you Buy Now or Continue to Rent?

While many renters are reluctant to buy a home, it may be time to consider this option, especially in the luxury market of Miami. With many new construction condos on the market, it may be time to make the leap from renting to buying. When you buy a luxury condo in Miami, you have an asset compared to renting, which doesn’t provide you with anything other than a place to live.

If you’ve thought about moving from a rented condo to one you can own, now may be the time to do it. With the possibilities of mortgage interest rates going up, you can borrow with a lower monthly payment now compared to once these rates go up. It may also be easier for you to meet the debt-to-income ratios lenders use now before the rates go up.

Raising Home Prices Help

Those making the leap from renters to buyers last year may have seen their property go up in value as much as 6%. While this may not have been the case for all buyers, home prices across the country have been on the rise due to a small housing supply compared to a large demand. This is especially true for metropolitan areas without much land for development.

Buying a home now could allow homeowners to see the same type of bump in value by next year. Going from a renter to a buyer will automatically add an asset to your portfolio, but it could actually add one that goes up in value more than average over the next few years.

Cost of Renting vs. Cost of Buying

Before making the leap to homeownership, it’s important to look at the cost of renting versus the cost of buying for your situation. The quarterly index from Florida Atlantic University called the Beracha, Hardin, and Johnson Buy v. Rent Index shows 23 metropolitan areas in the country and indicates it’s more favorable to buy right now in these cities compared to renting.

Of course, you do need to look at your own situation before making the final decision. Renting may still make sense for you, but buying may allow you to gain an asset, a new home and even pay less per month compared to your current rent.

Related: Renting vs. Buying

The luxury market is quite a bit different and it might make even more sense to buy instead of rent when it comes to Miami’s luxury condos. If you’re already spending a large amount every month on rent, why not buy and gain a valuable asset for your portfolio this year?