The average mortgage payment in Florida for a median-priced home is lower than paying rent, according to a recent study by real estate investment firm Roofstock.
This is especially true in the Punta Gorda and North Port-Sarasota-Bradenton metro areas.
Roofstock analyzed the latest data from the U.S. Census Bureau, the Department of Housing and Urban Development, and Zillow, and found that Florida has the 14th highest rent-to-price ratio at 6.6%, meaning that it would be more cost effective to buy a home rather than rent in our state.
In those areas where the rent-to-price ratio is at or higher than 6.26%, it would be more cost effective to buy rather than rent.
But even though Punta Gorda and the North Port-Sarasota-Bradenton area have lower rent-to-price ratios than 6.26%, it still pays to buy rather than rent here.
In Punta Gorda, which ranks 73 out of 120 small metro cities, the rent-to-price ratio is 6.01%. The median monthly rent in Punta Gorda is $1,170, while a median price home is $233,659, with a monthly mortgage payment of $760.
The North Port-Sarasota-Bradenton area ranked 51 out of 85 midsize metro areas listed. Its rent-to-price ratio is 5.85%. A median price home is $292,853, with a monthly mortgage payment of $953.
A spokesman for the research team said the study did not factor in taxes, private mortgage insurance (PMI) and other costs, so the mortgage payment would be higher, but still lower than the median monthly rent.
In Florida, the rent-to-price ratio is 6.6%. Median monthly rent is $1,442, and the monthly mortgage payment for a median price home of $262,291, is $853, Roofstock reported.
The median monthly rent in the U.S. is $1,369, while the monthly mortgage payment on a median price house at current interest rates is less than $900, which represents a 6.26% rent-to-price ratio, Roofstock found.
Advantages of buying
In Charlotte County, the median price of a single-family home was $269,900 in November, according to the Board of Realtors of Punta Gorda-Port Charlotte-North Port-DeSoto, Inc.
Jon Stoneburner, mortgage broker at MortgageRight in Punta Gorda, said current rents are about 1.12% of the air-conditioned square feet to determine the monthly rent charged.
“A current sales price of $270,000 (median price rounded out) with 5% down at 2.625% interest on a 30-year fixed mortgage, would cost $1,030 for principal/interest, $80 a month for insurance, $281.25 in taxes, and $58.25 in PMI, for a total payment of $1,449.50,” he said.
Stoneburner said that there are programs with 3% interest “which would increase the payment by another $105.50, for a total (mortgage) payment of $1,555.”
Bill Dryburgh, president of the Board of Realtors of Punta Gorda-Port Charlotte-North Port-DeSoto, Inc., said there are other advantages of owning a home rather than renting. “When you rent a home or apartment for $1,000 a month, for example, at the end of the year you’ve spent $12,000 and you can’t take anything off on your taxes.”
Dryburgh went on to explain that renting offers no deductions such as interest paid on the mortgage loan. Also, homeowners are building equity; they are making their wealth grow.
He said Realtors in his association will provide three mortgage lenders’ names and offer a program called Down Payment Assistance to the buyer in which financial guidance is given.
Dryburgh passed along this bit of advice to those who are in the market to buy: If they thought of paying cash, it might be more feasible to take out a mortgage, because at the current low rates of under 3%, they might want to invest the money in an investment yielding 4% to 5%, he said.
But what if you want to rent?
In our area, rents are not inexpensive, although some apartments can be found for under $1,000. But let the renter beware — one less-expensive complex in our area had numerous negative tenant reviews posted online.
The complex’s rent varied: a one-bedroom went for $633, a two-bedroom apartment cost $755 per month, and a three-bedroom apartment of just 1,154 square feet rented for $870 per month. Included in the rent were water and sewer and gas, but if you wanted a washer and dryer, it would cost extra.
If you want to rent a condo or townhouse in Charlotte County, rents ranged from a low of $800 to a high of $4,995. At Heritage Landing in Punta Gorda, there were units for rent ranging from $1,239 to $4,500; Vivante in Punta Gorda had a three-bedroom for rent at $1,800; a two-bedroom condo on Jamaica Way was renting at $2,200; a townhouse on Rampart Boulevard in Port Charlotte was renting for $2,500, and a condo’s rent on W. Marion Ave. was $3,500.
Port Charlotte’s Lakes of Tuscana had a one-bedroom renting for $1,245, while a three-bedroom condo on Black Beauty Drive in Punta Gorda was renting for $4,995. At the same complex on Black Beauty Drive, another three-bedroom’s rent was $2,750.
On Pirates Lane in Punta Gorda, a two-bedroom condo was renting at $3,500, but a one-bedroom on Vasco Street in Punta Gorda was $800. Also, there was a studio apartment renting for $900 in Punta Gorda, that looked like it was part of a home that had been divided.
In a fairly updated condo complex with amenities, a two-bedroom unit was averaging in the $2,000s range. The median price of a condo or townhouse in Charlotte County was $190,999 in November. Using a similar ratio as the one for mortgaging a house, the monthly payment for a two-bedroom condo would come under that of rent for a similar unit.
The top rent-to-price ratios in Florida
In Florida, several large metro areas were in the top 15 of rent-to-price ratios favoring home ownership. In the Tampa-St. Petersburg-Clearwater market, the ratio was 6.7%. The median price for rent was $1,354 while the mortgage payment on a median price home of $240,308, was $782.
The trend was seen in the Fort Lauderdale-Pompano Beach market, where the rent-to-price ratio was 6.69%. The median price for rent was $1,742, and the mortgage payment on a $312,574 median price home, was $1,017.
In the Orlando-Kissimmee-Sanford market, the rent-to-price ratio was 6.57%. There, rent for a median price apartment was $1,472, while the mortgage payment on a median price home of $268,806, was $874.
Since 2012, home prices have grown 1.6 times faster than rent. Prices dipped significantly during the housing crisis, but “home prices not only recovered but rose nearly 70% from the lowest levels,” reported the Roofstock Team in its report.
When considering whether to buy or rent, the rent-to-price ratio can be a useful metric, calculated as median annual rent as a percentage of median home price, advised Roofstock.
The West Coast tends to have lower rent-to-price ratios due to sky-high home values and relatively more affordable rents, while rent-to-price ratios are higher in southern states, which generally have below-average home values.
At 9.96%, West Virginia has the highest rent-to-price ratio, meaning it is the most favorable state on average for buyers. Median monthly rents in West Virginia are about 2.5-times higher than the mortgage payment on a median-price home, while renters are better off in Idaho which boasts a rent-to-price ratio of 3.84%.