(WFLA) — Tampa Bay area home prices surged more than 14 percent in December, according to Florida Realtors. That’s the biggest year-over-year gain of any major metro area in Florida. 2017 is also projected to be a strong year for home sales.
The strong market has condo owner Anna Coats considering putting her downtown Tampa property up for sale.
“The great thing about owning in downtown is that there are not a lot of places for sale, so the prices are much higher if you’re a seller,” Coats says.
She’s considering taking advantage of the market, selling, and renting for a while. She’s discussing her options with Broker Realtor Jamie Klingman of The Boutique Realtors. Klingman says selling to take advantage of the strong market makes sense in Coats’ situation, or in the case of someone like her mother, who recently put her home of more than 30 years on the market to downsize.
Says Klingman, “Renting gives you the option to try out a different lifestyle before you commit, and there’s value to that.”
Mortgage Loan Originator Brian Hiatt, of Movement Mortgage, says if you’re going to be living in a home less than three years, it makes more sense to rent.
He explains, “It can take three years of market appreciation for you to be able to overcome the upfront closing costs you’ve got to have to buy.”
For residency of more that three years, however, Hiatt recommends buying, especially if you’re looking at homes priced up to $300,000. He points to a basic formula: how much would the home you want to buy rent for? If renting that home would cost more than the mortgage (plus taxes and PMI), it’s probably a good buy.
Hiatt used the formula to analyze the Tampa Bay area, and factored in variables including a down payment of 3 percent, a market appreciation of 3 to 4 percent, and a minimum of three years in a home.
“In 90 percent of the communities in the Tampa Bay area, rent prices are higher than the equivalent mortgage prices,” says Hiatt.
With that under consideration, Coats says she’s weighing her options, and will only choose to rent if it makes sense. She’s still looking for “the right property at the right place at the right time.
Hiatt provided these additional Pros and Cons for Renting versus Buying:
Renting – Pros:
- Flexibility in time/location
- Not locked in past your lease term
- Landlord responsible for maintenance
Renting – Cons:
- Typically more expensive for the same size/type of dwelling
- Rent can go up every year
- Upfront costs often include a security deposit and first/last months’ rent
- Landlord can sell the property
- Typically not much control over decorating/improvements
Owning – Pros:
- Typically costs less per month than renting
- Builds equity
- Historic average appreciation of 3 to 4 percent
- Income tax savings – you can itemize and deduct property taxes and percentage paid. Also, there are possible additional tax savings for first-time home buyers through the Florida Housing FTHB Tax Credit
- You decide how long to stay
Owning – Cons:
- Down payment can be tough to save for (although there are FTHB programs available for qualified applicants)
- Maintenance is your responsibility
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