Zillow.com, the real estate information company, recently released a study that finds, in most U.S cities, buying is a better deal than renting after just 3 years of ownership. In Florida, it's even less time because real estate prices have been crushed.
If there's one thing I see Marco Island buyers struggling with, it's property valuation. Even in a market where prices are often between a half and a third of what they were five years ago, many are still unsure that they're getting a good deal. This study by Zillow is proof that not only are prices cheap when compared to 2006, they have fallen to the lowest in the country relative to rent.The time to buy in Florida is right now.
Many are familiar with the price-to-rent ratio. This is a useful way to value real estate, however, it doesn't take other important factors into account. Taxes, tax deductions, down payments, utilities, appreciation, maintenance, opportunity costs, and fluctuations in the rental market are all significant components to this question and the new study by Zillow factors all of it in. The results are expressed in the form of an equilibrium point when renting equals owning.
In Florida, the break-even point is around 1.6 years, the lowest in the country. Marco Island wasn't specifically studied because it's too small, but Miami and Tampa were evaluated and Marco Island's price graph follows theirs. To put this in context, Detroit and Las Vegas had equilibrium points of 1.7 years. San Diego was at 3.6. San Francisco came out at 5.9 years. And the longest wait for buying to benefit was San Jose at 8.3 years.
If all this is attractive and you'd like to take advantage but don't have any spare cash laying around, don't despair. Did you know that you can purchase real estate as an investment in your IRA? Most people don't know this but it's true. The fat cats and movers and shakers have been doing it for years. Contact us and we'll show you how. Also, keep an eye out for an upcoming article about this in our blog.
All of this is great news for you if you're considering buying on Marco Island or anywhere in Florida for that matter. In the sometimes confusing world of property valuation, Zillow's study is proof positive that Florida real estate is undervalued. So, stop fixating on foreclosures. Everything out there is cheap.