South Florida home prices and monthly rents continue to rise, but whether it’s better to buy or lease is mostly a matter of location and intention.
The Seattle-based real estate company Zillow has come up with a measure called the “breakeven horizon” that weighs how long a person must live in a home before it makes more sense to buy it.
For example, in Boca Raton last month the median rent on all homes was $1,987. At that rate, it is financially better to rent unless you plan to live in the home for 2.4 years or more.
But in West Palm Beach, where the median rent was nearly $600 lower per month than Boca Raton, you would only have to live in a home 1.9 years before it makes more sense to buy.
Other Palm Beach County cities included in Zillow’s measure were Boynton Beach (1.9 years), Delray Beach (2.1 years), Jupiter (2.6 years), and Palm Beach Gardens (2.1 years).
In Palm Beach, Broward and Miami-Dade counties, Zillow found a 3.5 percent overall increase in rents in July compared to the same time in 2012. A three-bedroom home in the tri-county area is now going for a median of $1,771-a-month.
At the same time, Palm Beach County home prices surged 14 percent in July compared with a year ago, according to a study by competing market analyzer CoreLogic.
The increase is higher than the national average, which stood at 12.4 percent in July.
Statewide, the price increase, including distressed sales, was 12.6 percent. But the price hike wasn’t enough to put the Sunshine State on the list of most extreme price climbs.
Those titles went to Nevada, which saw a 27 percent increase, California (23 percent), Arizona (17 percent), Wyoming (16 percent) and Oregon (15 percent.)
Economists from CoreLogic and Zillow agree that the double-digit price gains are temporary aberrations in a market still trying to correct itself.
“Home prices rising 13 percent or more year-over-year is clearly crazy,” said Zillow Chief Economist Stan Humphries. “Long term, we’ll see moderation in pricing and that’s going to be a healthy thing.”
CoreLogic’s Mark Fleming said price gains will slow this fall with waning seasonal demand nationwide and higher mortgage rates.
Still, the market turnaround also jumpstarted interest in real estate as a profession with agents who left during the crash rejoining the Realtor ranks.
Just as with Zillow’s “breakeven horizon” Realtor earnings depend a lot on location. While agents who deal in multi-million-dollar Palm Beach Properties may take home a million dollars, the average Realtor in Palm Beach County made $58,623 last year.
According to the U.S. Department of Labor Statistics, that income is $12,749 more than that national average and $8,894 more than Realtors statewide.
Palm Beach Gardens Realtor Lowell Farber recently rejoined the profession, acknowledging that the potential to make more money was a driving factor. But he’s also realized there are new challenges.
“I’ve enjoyed it more than I thought because it’s so busy,” Farber said. “I don’t want to say I’m an adrenaline junkie, but I like the thrill of sales.”