Buy v. Rent — Coral Gables Real Estate

posted on December 2nd, 2009 filed under: Real Estate News

Care for an example of how renting can be much cheaper than buying in the Coral Gables real estate market?  One fairly typical situation (and examples abound) is for a property to be for sale at about $600,000 or for rent for about $30,000 annually.

As a rule of thumb, the cost of ownership is roughly 10% of the purchase price per year ($60,000 . . . maybe $54,000 after taking tax benefits into account, depending on the buyer’s profile).  The cost of buying this property is therefore about twice the cost of renting.

That is a historically aberrant real estate market condition.  Back in the ’80s and ’90s, when cooler heads prevailed, the cost of buying Coral Gables real estate was a bit more than the cost of renting.  The price of a home typically might have been 12 to 14 times the annual cost of renting the same property, making the cost of ownership 1.2x to 1.4x the cost of renting.  Now the price of a home in Coral Gables is often 20 times the cost of renting the same property, making the cost of ownership 2x the cost of renting.

If something can’t last, it won’t.

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posted by // This entry was posted on Wednesday, December 2nd, 2009 at 9:59 pm and is filed under Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed.

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