Latest Report Shows Buying Property in Miami More Affordable Than Renting

January 25, 2011 by Lucas Lechuga

Top 10 Cities to Buy vs Rent

It is more affordable in Miami to buy vs rent, according to the latest Rent vs Buy Index released by Trulia.com earlier this afternoon.  Miami and Las Vegas topped the list of metropolitan cities where it is more affordable to buy rather than rent.  The report compared the cost of leasing a 2 bedroom home with the cost of ownership.  An increase in demand from renters along with a shrinking inventory has caused the pendulum to shift in the opposite direction.

Top 10 cities to rent vs buy

In contrast, the above list shows the top 10 cities where it is still more affordable to rent vs buy along with their associated price-to-rent ratio.

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43 Comments on "Latest Report Shows Buying Property in Miami More Affordable Than Renting"


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Anonymous
Mike
5 years 8 months ago

Are the outrageous condo fees and taxes taken into consideration. I agree that when you look at the sale price of the unit and compare it with the rent, it seems like a good idea to buy. It just seems that high condo fees are the deal breaker for me.

Anonymous
Papercut
5 years 8 months ago

You can buy $80k condo in Miami now and rent it for $1200/mo within 2 weeks. It’s a no brainer, really. The only explanation for such a mismatch is impaired credit access. But it can’t last forever, and it won’t. 20 years from now people will not believe it happened.

Anonymous
Gixxer1000
5 years 8 months ago
Mike, Call around and get quotes for insurance on a property near the water where the majority of these condos are and you’ll see that’s where a lot of the cost are. $700 seems like a lot for HOA fees until I looked around and realized my insurance could easily be more than $400 for similarly priced house. You’re going to have to pay whether you’re in a house or a condo. Your complaint is about living in a coastal region that’s prone to hurricanes, not condo fees. Same thing with condos. The taxes are based of the millage rates.… Read more »
Anonymous
Gixxer1000
5 years 8 months ago
Anonymous
Makes Me Think
5 years 8 months ago

Gixxer, 5K a year for property insurance? what kind of SFH are we talking about?
that sounds a bit high for a 400k house.

If rent prices continue rising then it can’t be long before those sales prices begin to rise.

Anonymous
Makes Me Think
5 years 8 months ago

papercut said: “You can buy $80k condo in Miami now and rent it for $1200/mo within 2 weeks”

can you show us an example of this? are there any 80K condo’s that not in foreclosure ravaged buildings where maint has been scaled back to bare minimum. Are you goning to be able to find a sucker to rent it out at $1200/month when there are safer cleaner buildings renting for less?

Anonymous
gables
5 years 8 months ago

Guess I have to keep jabbing at Gixxer on this one when Case-Shiller reports. You called the bottom on Miami RE in Spring 2009. Still standing by that call?

Anonymous
Papercut
5 years 8 months ago

Makes me Think,
Here is one example.
Sale (no units are available now, I wonder why?, but you can see what was sold recently):
http://condosforsale.miamicondolifestyle.com/gateway-to-the-grove-condos-for-sale
Rent in same building:
http://condosforrent.miamicondolifestyle.com/gateway-to-the-grove-condos-for-rent
If you apply some effort instead of just asking other people to show stuff to you, you can find plenty of opportunities.

Anonymous
Papercut
5 years 8 months ago

Took me few minutes to find another one.
Short sale approved for 65k:
http://condosforsale.miamicondolifestyle.com/miami-mls-listing/M1459393
Unit one floor above just rented for 1150/mo:
http://condosforrent.miamicondolifestyle.com/midtown-lofts-condos-for-rent

Anonymous
Joe
5 years 8 months ago

Gixxer 1000 — The idea that a 25th-floor condo in a new building should have to pay $5,000 or more per year for hurricane insurance is just flat-out absurd. (Hell, it’s high for a house, but at least a house can get leveled or flooded out by a hurricane. A brand-new high-rise should be all but impervious to hurricane damage, especially above the first floor.)

Anonymous
gables
5 years 8 months ago
Joe, Units above the first floor are still very vulnerable in a high rise building. Plenty of debris still floats through the storm, even at higher elevations. Its takes a very small object at 100 mph to penetrate the envelope of a building. And once the envelope is penetrated, very bad things happen because it blows out the windows of other areas in the building which were not subject to the initial broken window. The larger the building, the greater the probability of a weak point in the envelope-and resulting failure. First floor flooding would also result in serious damage… Read more »
Anonymous
Joe
5 years 8 months ago
gables — I know the first floor is vulnerable to significant damage; that’s why I said “above the first floor.” I also know that damage is possible on the higher floors, but 90-plus percent of that possible damage could be preempted by a solid design and hurricane-proof structures, glass, etc. (rather than by going cheap, as happened on a lot of new buildings). My point is, $5,000 per year times 100 or 200 units per building is upwards of $1,000,000 per year per building for hurricane insurance, when the odds of any given building actually suffering substantial hurricane damage is… Read more »
Anonymous
Joe
5 years 8 months ago

Has anyone figured out if the above chart includes condo fees and/or taxes? It seems almost unbelievable that total cost of r.e. ownership is now lower in Miami than it is in Phoenix, Arlington, El Paso, etc.

Anonymous
gables
5 years 8 months ago
Joe, major hurricanes are more than one in 100 year events. In fact, following the risk calcs, a 100 year event has over a 60% probability of occurring in your lifetime. Miami-Dade has had multiple hits in the past 100 years. They are not infrequent. Even a well designed building will suffer damage during a major hurricane. Winds find the weakest point in the structure and attack it. So unless you are sure you had sound material and construction technique on your entire structure-can you find this in miami?- most likely you will have a problem to some degree. thus… Read more »
Anonymous
Gixxer1000
5 years 8 months ago
Joe, The whole point of the HOA is to divide the costs equally to the proportional amount of space you own. Even if the damage is limited to the bottom few floors all the units have to pay to cover it equally. Under your logic only the penthouse owners need to pay for repairs to the roof. Again were talking about hazard insurance not personal property insurance. If you think that HOA fees are out of whack then look at the actual balance sheet and break down where the cost are going. I’m sure we could argue every single item… Read more »
Anonymous
Gixxer1000
5 years 8 months ago

http://www.condovultures.com/News/ViewArticle/tabid/77/ArticleId/15132/-300-Million-In-Annual-HOAs-Created-With-South-Florida-Condo-Boom.aspx

“Unless property insurance costs drop or management fees are slashed, it is difficult to see how the condo association fees will go down.”

“As a general estimate, condo associations charge about $0.50 per square foot per month at projects located on the mainland in each of the seven largest South Florida markets east of Interstate 95. On the barrier island, associations tend to charge about $0.70 per square foot per month due to more expensive insurance coverage and added amenities such as towel service on the sand.”

Anonymous
Gixxer1000
5 years 8 months ago
gables, Yes I’m sticking with the 2nd quarter 2009. If you actually had access to capital this was the best time to buy the best units. Bulk buyers came in, bought all the best units at a discount and now the crumbs are left. And I thought we talked about this around xmass. The case shiller index for Miami includes Dade, Broward and Palm Beach counties. I will readily admit before moving to Miami I relied heavily on data like case shiller that considers the entire area from Homestead up to Palm Beach all Miami. Now that I live here… Read more »
Anonymous
gables
5 years 8 months ago
gixxer, still stubborn about your bottom call. there have been plenty of good deals on nice units since then. i would not say crumbs are what’s left. and i don’t dispute the variation in prices around the metro area, although i am not really convinced the good areas are indeed rising in price. at least not from my experience. the building i moved out of last year (and would have bought in), had its 2 best units go on the market in the past months at prices below inferior units of the 09-10 stretch. don’t confuse developer sales with resales… Read more »
Anonymous
Gixxer1000
5 years 8 months ago
gables, And I see you are still stubborn as ever. Maybe crumbs wasn’t the best choice of words. But the exception doesn’t disprove the rule. I’m sure you’ll be able to find deals lower than 09-10 for years to come. That’s the nature of a deal. I’m not saying everyone should run out and buy right now. But on average the price of condos in areas that most people want to buy were at the lowest point around that time. As far as the traffic you seem to be missing my point. I have friends who live downtown coral gables… Read more »
Anonymous
gables
5 years 7 months ago
gixxer, can a bottom actually be called in a time period with no transactions? what i mean is if the number of today’s “exceptions” exceed the number of transactions from 2009, you really have to wonder where the bottom is defined. at any rate, seems to me i can buy at the same price today as i could have in spring 2009. just like to yank your chain every once in awhile, since you were so adamant about spring 2009 being a bottom. and coral gables isn’t just for 40+ with kids-not great for condos anyway. consider 30+ without kids… Read more »
Anonymous
Gixxer1000
5 years 7 months ago
gables, “seems to me i can buy at the same price today as i could have in spring 2009” Your quote really highlights the point I was trying to make back then. Prices were falling and people were talking like they were going to keep falling. My point was that around 2nd quarter 09 they pretty much went as low as they were going to go. That doesn’t mean that they are going to start going higher or that people are actually buying at that point. But the reemergence of the rental market pretty much set the floor. If you… Read more »
Anonymous
owneratinfinity
5 years 7 months ago

Yes I’m sticking with the 2nd quarter 2009. If you actually had access to capital this was the best time to buy the best units. Bulk buyers came in, bought all the best units at a discount and now the crumbs are left.

====> agree 200% – that is what I did when buying my unit,

====>best unit on the 50/51th floors, best view direct east ocean/bay/city view, discount price $200 per foot

Anonymous
gables
5 years 7 months ago

gixxer and owner, just curious when the bulk buyers were most active? they set the bottom, so to speak. when in 09 and 10 were they making their deals? my guess is it after spring of 09. probably mid 2010?

Anonymous
Joe
5 years 7 months ago
gables — I find it very hard to believe that the average structure in Miami suffers substantial hurricane damage more than once per 100 years. I was in Miami for Katrina and (Wilma?) and 1-2 others, and while there was damage, there’s no way the average condo building suffered $1 million in damage, which is roughly how much each building pays for hurricane insurance if $5,000/year is the true average cost. Even if it’s once every 50 years, that’s still the equivalent of paying about $100 million in insurance premiums (adjusted for inflation, etc.). === Gixxer 1000 — I never… Read more »
Anonymous
Gixxer1000
5 years 7 months ago
The problem with your argument is that it IS substantially cheaper to live in a condo that in a single family home. Here we are only discussing the cost of insurance or taxes and how they relate to the price of the home. If you have a $500k single family home or a $500k condo in the same area yes your taxes and insurance are going to be similar. But that is only one component of ownership. The problem is that comparing a $500k single family home to a $500k condo is a false comparison. If you wanted to live… Read more »
Anonymous
gables
5 years 7 months ago
Joe, Katrina and Wilma were not major hurricanes when they struck the South Florida Coastline. They are not close to the 100 year storm period. Think of all the damage occurring from Andrew, and that was a small area storm centered around Homestead. Imagine the damage of a major storm which has a more direct strike on the metro area. And that is not an infrequent occurrence. Structures will handle Cat 2 and below with limited damage, but as you push Cat 3 and beyond, damage increases quite a bit. Wind forces do not increase linearly with wind speed. Its… Read more »
Anonymous
Joe
5 years 7 months ago

gables — Nothing you have said has refuted any of my points above. A condo that pays $1 million per year for hurricane insurance will pay $50 to $100 million over a 50-year period (adjusted for inflation, etc.). There’s simply no way the average condo building in So. Fla. racks up $50 to $100 million in storm damage every 50 years. No chance.

Anonymous
Joe
5 years 7 months ago
Gixxer 1000 — If living in condos was so much cheaper than living in single-family homes, then all of the condos would have been sold out 5 years ago and there would be vast areas of SFH Miami that are ghost towns (which, even accounting for foreclosures, isn’t true). Please, get serious with your arguments and comparisons. One minute you’re comping Miami and Manhattan; the next minute you’re talking about SFH in Brickell that don’t even exist. Give us a break. Also, something like 80% of the zip codes in Miami-Dade saw decreasing prices in 2010, so your continued insistence… Read more »
Anonymous
Gixxer1000
5 years 7 months ago
Joe, What in the world are you talking about??? SFH don’t exist in Brickell???? So I guess all the houses I see on S. Miami ave with the condos towering over them are just illusions. I’m beginning to think your extent of Miami knowledge is that you visited south beach a couple of times. I work in development, in Miami. I also study real estate development, in Miami. So I have access to pretty much most professional and academic real estate professionals, in Miami. And while not all of them agree, none of them have your opinion. Yes the overall… Read more »
Anonymous
Joe
5 years 7 months ago
Gixxer 1000 — You’ve been “in Miami” for, what, five months? And you think that makes you a big expert on all things Miami? Give us a break. As for SFH in Brickell, I didn’t literally mean that not a single SFH exists in Brickell. My point was that for every new SFH built in Brickell in the last 20 years, there’s probably been 200 condo units built. Thus, this hardly makes for much of an apples-to-apples r.e. comp. (Hell, I’d love to know how many SFH have been built in Brickell in the past 20-30 years. I bet it’s… Read more »
Anonymous
gables
5 years 7 months ago
Joe, you said “There’s simply no way the average condo building in So. Fla. racks up $50 to $100 million in storm damage every 50 years. No chance.” Joe, obviously you do not understand the point of insurance. it does not really exist to cover small damage occurring on a regular basis-although you can gain some of that benefit every few years. It exists to avoid catastrophic loss of your structure, particularly in the early years of ownership. Most condo associations could dig themselves out of $1 or $2 million in damages in a given year. What happens if/when the… Read more »
Anonymous
Gixxer1000
5 years 7 months ago
Joe, Spin it if you want. It’s apparent you know nothing about Miami. It’s obvious from your post that you didn’t know about the SFH along S. Miami ave. If you knew they were there then you would have know that they are all more expensive to own when compared to a condo. As far as pricing goes you simply want to argue. I have conceded that many areas have not only hit bottom when I predicted but that many will also continue to go lower. I don’t know how to say this any clearer. I was tracking urban areas… Read more »
Anonymous
gables
5 years 7 months ago
Gixxer, just a couple of comments from above. “The result is that we have excess inventory in the suburbs where we don’t need and a shortage of inventory in the urban areas where we do need it.” Where is the shortage of inventory in the urban areas? Still have thousands of unsold, unlived in units. “The bulk buying decreases values, which it did during the peak of bulk buying activity in 2009.” I asked this of you and owner previously, but may have missed the reply. Are you certain the bulk buying was occurring then, particularly your bottom spring 2009?… Read more »
Anonymous
Gixxer1000
5 years 7 months ago
gables, “Where is the shortage of inventory in the urban areas? Still have thousands of unsold, unlived in units.” Just look at the number of people moving downtown and the number of units available. Downtown is poised to add another 10,000 people or 6,000 households by 2014. With almost nothing in the pipeline where are these people going to go? Even if developers wanted to, the earliest they could get additional inventory would probably be around 2014. During the condo boom a lot of rental buildings were converted to condos creating a shortage of rentals. So now if you want… Read more »
Anonymous
gables
5 years 7 months ago
gixxer, thanks for the recap on bulk buys. as i said, did not follow them close. hope there were other legit examples like the Marina Blue deal, rather than it being the anomoly. “Just look at the number of people moving downtown and the number of units available. Downtown is poised to add another 10,000 people or 6,000 households by 2014.” These folks are moving there because there is an oversupply of units. Perhaps in 2014 there will be a higher demand than supply, but not today. There is not a lack of supply in downtown today, which is what… Read more »
Anonymous
Joe
5 years 7 months ago
gables — You’re starting to sound like a shill for the insurance business. I understand fully that the purpose of insurance is to hedge against catastrophic loss. And for about the 10th time, I’m saying that there’s NO WAY the average building in So. Fla. suffers catastrophic damage every 50 years, yet EVERY SINGLE BUILDING is paying enough over a 50-year period to cover catastrophic loss. At $1 million per year per building (just to use round numbers) and accounting for inflation, condos are paying well north of $100 million for insurance over a 50-year period. (Probably more like $150… Read more »
Anonymous
Joe
5 years 7 months ago

gables — By the way, for someone who is being so strident re: the purpose of insurance, you seem to be a little naive yourself. Absolutely no one in Miami is “pay[ing] $2k a year in Miami to insure a $25k automobile!” They’re paying $2k a year to insure the $25,000 car *PLUS* $100,000 or $200,000 or $300,000 in liability coverage. Quite a big difference.

Anonymous
gables
5 years 7 months ago
joe, you prove my point. your insurance is not meant to cover yearly damage costs. it is protection against rare, but catastrophic, events. the condo buildings are not paying for insurance to cover regular wind damage. you pay to cover a significant event. insurance is a business, and it must collect more than it pays out over time or go bankrupt. not sure how a business model would work that paid out more in claims than it took in premiums each year. but when you gripe about the yearly condo premium being too high, you are implying insurers should do… Read more »
Anonymous
gables
5 years 7 months ago

joe, most of the current structures did not exist in Miami 50 years ago. Hardly even 25 years ago. Look at the damage from the storms that have struck since the 20’s. They destroyed large parts of the city-many of those structures never had the chance to get hit again. The storms will strike again. My guess is you have never seen the damage from a major hurricane.

Anonymous
Joe
5 years 7 months ago
gables — We’re going in circles here. I’ve acknowledged several times that insurance is protection against catastrophic events and not against minor year-to-year damage. Please move on from this nonsense. As for the insurance rates, you seem unwilling to acknowledge that the amounts being paid by the condos over a 50-year period are more than enough to simply self-insure a catastrophe. What’s the point of paying $100 million or $150 million (accounting for inflation) over a 50-year period when the buildings could simply set aside that same amount of money (or less) and self-insure? (And before you come back with… Read more »
Anonymous
gables
5 years 7 months ago
Joe, over a fifty year return period, when will you get hit by that storm? in year 1? or year 50? you assume the latter. then your argument has some merit-insurance would not be needed. You are really paying for protection in the early years, and spreading out the cost over many years. you can only self insure if you already have the money to cover the replacement-or the property is owned outright with no mortgages, and you are willing to take on the risk of loss yourself. your lack of understanding of probabilities and risk is what leads you… Read more »
Anonymous
Joe
5 years 7 months ago
gables — I never suggested one individual condo could suddenly stop having insurance, although it probably could if it went about it in the right way (i.e., high reserves upfront). My point is that the entire system is broken, and there must be a better way. Just as with health insurance, it doesn’t need to be “one size fits all.” I’d love to know what the average deductible is on these condo policies. A smart condo would have a $10-plus million deductible to lower the annual cost, just as individuals can save thousands every year with a catastrophic-care health insurance… Read more »
Anonymous
gables
5 years 7 months ago

Joe, insurance is what it is. Not a big fan of it myself. To me, it has lead to overvalued assets and construction in dangerous locations (ie along California faults and eastern coastlines). Nobody in their right mind would buy a $500+k condo in Miami if insurance did not exist-unless you were filthy rich and could afford the risk. But we pay the price because there is too much tied up in the purchase to not protect the investment. Again, its nothing more than probabilities and risk you are willing to take.

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