To Own or To Rent – That is the Question

Here’s an interesting piece of housing news.  According to statistics provided by the Center for Housing Policy in Washington D.C., of 209 metropolitan areas in the United States, the Tampa Bay market ranks among one of the most affordable in home prices.  The most expensive was San Francisco with a median price of $585,000; Tampa ranked 182 on the list with a median price of $120,000. 

 If you’re living in an apartment right now, you might want to get out the calculator and do a little figuring.  Here’s why.  That same study found that of those 209 metro areas, Tampa ranked as the 64th most expensive rental market with an average monthly rent of $958.  According to real estate web site Trulia, buying was cheaper than renting in 74% of the country's 50 largest cities in July.  A recent study by Deutsche Bank says that the cost of owning a home is down dramatically.  They say that home owners now pay just 9.8% of their income in after-tax mortgage, tax and insurance payments, down from 17.2% in 2007.  That’s the lowest cost since the study began in 1999.   

William Ryan Homes Tampa Division President Jeff Thorson thinks all these numbers may add up to an excellent short-term buying opportunity, especially for first-time buyers. “If you were to purchase a $150,000 home, you’d be looking at principle and interest payments of about $800 per month.  With interest rates hovering near all-time lows, it makes a lot of sense to look at purchasing a new home,” Thorson said.  Some other data may back up the assumption that now is a good time to buy.

According to the University of South Florida, from 2009 to 2010, the average prices of non-distressed home sales declined by just 1%.  And according to the Greater Tampa Association of Realtors, existing home prices bottomed out at about $135,000 in January of this year; since that time they have climbed to an average of about $157,000 this July.  According to Thorson, that’s evidence that pricing has stabilized and is poised to begin a more consistent pace of increases.  “That means that the lowest prices might already be in our rearview mirror,” he added. 

New home construction cost have dropped about 35% since the peak of the market, another reason that now is a good time to buy.  But buyers should also note that there are rumblings of price increases for materials, products and labor.  One building expert is already predicting that lumber prices alone may increase by 30-35% over the next year and those costs are likely to show up in the price of a new home.      

Even though there are surprising deals to be had in the foreclosure and short sales market, Thorson recommends buyers look at the pros and cons very carefully.  “With a foreclosure, in most cases the buyer is going to have to put some serious money into the home and they should also know that those homes don’t come with a warranty.  By contrast, there’s no need to put additional money into a new home and you get a builder warranty,” he said. 

If there’s a few years difference in the age of the homes, Thorson says there’s another benefit to new home buyers.  “Builders have made substantial progress in building more energy efficient homes.  William Ryan builds all of it homes to meet the Environmental Protection Agency’s Energy Star rating and with that, buyers can recognize savings of up to 50% on their energy bill.  Those are additional dollars in their pocket,” he added.

One last consideration for buying new according to Thorson is the livability of the home.  “With a new home, you can pick the design and floor plan that’s best suited to your family’s needs and lifestyle.  That’s not always the case with a resale or foreclosed home that was built for someone else’s needs and lifestyle.” 

William Ryan Homes is a family-owned company that was founded in 1992.  Since then, the company has served more than 9,000 satisfied homebuyers in five states and several metropolitan markets including Tampa, Chicago, Milwaukee and Phoenix.  For more information visit WilliamRyanHomes.com or call 813-627-9040.