New study shows renting beats buying a home, except in Cape Coral
Researchers at Florida Atlantic University and Florida International University have concluded that even though the cost of houses is declining, it's still smarter to rent — everywhere except Southwest Florida.
Most places in the United States had data indicating that renting beat out buying, with the exceptions of Springfield, Massachusetts and Cape Coral-Fort Myers, Florida.
The study consisted of gathering the current price-to-rent ratios of different cities and comparing them to historic price-to-rent data. Price-to-rent ratios are found by dividing the average home price by average annual rent. If the current ratio is above the historic average ratio, it means renting is better. If the current price-to-rent ratio is below the historic average, it means buying is better.
Southwest Florida data
While the data suggests it's more cost-effective to rent in most places in the United States, Cape Coral is the outlier.
Cape Coral's price-to-rent ratio is under the historic average, indicating it's better to buy than rent in the area.
Hurricane Ian wiped out homes and rentals in the area, which made the existing supply problem worse.
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Cape Coral isn't alone though. Data suggests that it's better to buy than rent in Springfield, Massachusetts as well.
“In these two markets, home prices are falling, if only slightly, while rents are rising at an astounding rate,” co-author of the report Ken Johnson said.
How does the rest of the state compare?
The numbers say it's better to rent in Deltona, Jacksonville, Lakeland, Orlando, Miami, Palm Bay, North Port, and Tampa.
Data showed Jacksonville's price-to-rent ratio was well over the historic ratio, making it the best deal in the state and ranked number 10 out of 99 in the study.
Lakeland came in 23rd, followed by Orlando at 31, Tampa at 33, Deltona at 46, Miami at 62, Palm Bay at 63, and North Port at 84. Cape Coral was ranked last in the study.
"Cape Coral, Miami, and Northport are the three hottest rental markets in the country in terms of the degree that they're overpriced," Johnson said.
How does the rest of the country compare?
The study suggests renting is the least expensive compared to owning in McAllen, Texas. San Jose, California, ranked second, followed by Nashville, Tennessee.
What it means for Southwest Florida
Johnson said even though the data shows buying may be better than renting is Southwest Florida, home prices are at a record high.
"We have an under supply of housing and we have people moving into this area and Southwest Florida is one of the most popular areas of the state to move into," Johnson said.
He says the effects of Hurricane Ian won't keep people from moving to Southwest Florida.
"Hurricanes are to Florida like earthquakes were to California in the 40s, 50s, and 60s," Johnson said. "Earthquakes did not stop people from moving to California and hurricanes, there is no evidence that they'll cause a slowdown in migration into anywhere along the Gulf Coast."
Johnson predicts Southwest Florida will continue to have unaffordable housing until the area can accommodate the growing number of people looking to rent or buy a home.
This article originally appeared on Naples Daily News: Cape Coral along worst places to rent versus buy in the United States
