Report: Miami Millennials Better Off Buying Than Renting, but Good Luck With That
Image via WikiCommons
When it comes to real estate in Miami, right now there's really no such thing as a deal, but if you're a millennial looking to save some money, Trulia reports it's much cheaper for you to buy a home or apartment than it is to rent — in theory, anyway. Good luck with that in real life.
Usually when calculating whether to rent or buy, as a rule of thumb financial professionals try to figure out how much a mortgage would be based on a buyer putting 20 percent down on a fixed 30-year mortgage with that buyer moving about every seven years. Turns out millennials by and large can't afford 20 percent down and tend to move more often. So Trulia used a model of putting 10 percent down and moving every five years.
Using that model, Trulia found that buying is 23 percent cheaper than renting nationally. In Miami, there's an even bigger difference — it's 43 percent cheaper to buy. It's also one of the top markets in the nation where it's cheaper to buy.
Image courtesy of Trulia
The problem, of course, is that it may be cheaper to buy, but it's still definitely not cheap. Of all the markets in the top ten, Miami has the highest rent and the highest home prices. Which means while paying higher rents, Miami millennials would still need to find ways to save for higher down payments than their peers in many other cities.
That isn't a surprise. This summer, Zillow reported that Miami was the most expensive market in the nation for a millennial to rent. Using the rule that one shouldn't spend more than 30 percent of one's income on rent, Zillow found that just 8 percent of condos on the Miami market are affordable to millennials. The result is that Miami millennials (and, well, Miamians of all ages) end up spending a ridiculous amount of their income on rent.
Maybe that's also why Miami leads the nation in millennials who still live at home with mom or dad. Let's hope some of them are saving up to buy their own house. It might be one of the few ways an average young person in this city could actually afford to do so.
Of course, the Miami Herald points out it's difficult to buy an affordable home in a nice neighborhood in Miami, mostly because investors like to snap them up and — you guessed it — rent them out.
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