MIAMI — A new study found that rent prices may continue to rise in South Florida, according to research by Florida International University and Florida Atlantic University.
So, for those moving to the Sunshine State, is the better move right now to buy or rent?
A monthly study conducted by two Florida universities looked at 100 of the top U.S. housing markets in the country to compare the average prices of homes and rent and see how it fluctuates over time.
"Low price to rent ratio favors ownership. So now you are buying homes that are relatively low cost in terms of dollars and price, or one dollar in annual rent."
According to FAU real estate expert Ken Johnson, those in the market right now should go in with a buy-a-home-and-hold strategy.
"I mean, it's costly to live here, but I think the financial opportunities are here, the professional opportunities are here," Johnson said. "When I moved here 20-something years ago, I was floored at the cost of living, especially housing, but I was right to stay, and I think that people years down the road will feel the same."
The reason for the push to own rather than rent is due to multiple factors. The main one is a shortage of housing units.
Professor Eli Beracha at FIU said the U.S. is down about four million housing units, and the demand is through the roof.
"And that problem is not going to change anytime soon. To build the housing that is necessary to keep up with inflation growth, and to keep up with the shortage, will take at least a decade," stated Beracha.
It's the reason that home prices are so high right now.
Researchers said it's not expected to go down anytime soon but rather stay right where it is.
Beracha shared that transactions in South Florida are currently very low, with sellers not wanting to sell and buyers not wanting to buy.
But buying now is still your best bet before the market becomes even more competitive.
"People think about the risk of, 'Oh, I am going to buy a home, and maybe prices will go down,' and that is a big risk. I don't think that's going to happen, but I see how people would think so," Beracha said. "To me, much more of a risk is what happens if you rent, prices will continue to go up, and I think they will continue to go up as soon as interest rates go down, and then it is being priced. Your rent is going to be higher; you won't be able to buy a home, and you will be priced out of the Miami market."
So how do you make sure you are making a financially-sound decision?
Beracha said when you are looking to buy a home with all of its expenses, it should not cost you more than around 40% of your income.
Johnson said for those still wanting to rent, make sure you have a savings portfolio to help you in the long run.