Christina Rordam: Is owning more affordable than renting in 2016 Orlando?

Whether you own or rent, are an Orlando native or just moved here for work, the 2007/2008 U.S. housing market crash is likely seared into your memory like a brand on a bull. Now that we are seeing strong real estate stats such as a continued sellers market by way of lower inventory, rising median sales prices and multiple offers on homes for sale, talk of a market collapse and recession has resurfaced. I’m hearing concern from some agents and fellow homeowners here in Central Florida as well as nation wide via social media and legitimate news sources about buying versus renting. There is a fair amount of chatter on this topic and it seems to be in direct correlation to the success of the housing recovery. The hotter it gets the more questions arise. One might say some are having a bit of post-traumatic house stress syndrome. But what’s really happening? Ought we all worry? Let’s look at a few factors and discuss.

Everything is relative.

Real estate is always hyper-local. A recent buyer’s financial adviser told a family that the market crashes every five years so don’t buy now, wait a couple years more. That’s terrible advice in my opinion and it’s simply not realistic to say all markets are going to fare exactly the same way over the next market cycle. Interest rates cannot be predicted to stay this low forever, so waiting could effectively price some buyers out of the market. Ultimately if you are ready to buy based on your family life and work situations then the best course of action is to do so armed with information research and a great Realtor. The same goes for selling. If you are investing again, look at your ROI and your costs to fix up and rent or flip your investments and go from there. If the numbers work for you once properly crunched, then go for it.

Rents are on the rise, and it’s cheaper to own than rent in Central Florida.

This is good and bad depending on your point of view.

Great time to be a landlord, not so much a renter.

Orange and Seminole counties were both determined to be places where it is more affordable to own than rent in RealtyTrac’s 2016 Rental Affordability Analysis report released Dec. 23, 2015. RealtyTrac used housing data from the U.S. Department of Housing and Urban Development and labor data from Bureau of Labor Statistics as well as public record sales info.

Seminole County was noted to have owners paying 34.6 percent of what they make based on average wages and on median priced homes.

Conversely renting was noted to soak up 39.2 percent of renter’s earnings based on average rents and wages.

Stats for Orange County showed owners paying 32.8 percent of what they made in payments and renters paying 38.2 percent of what they make towards their rent.

Basically, if you can and want to, it’s cheaper to own than rent in Orlando and Seminole counties. Rent isn’t getting any cheaper either.

Daren Blomquist, vice president at RealtyTrac, went as far as to state the following: “In markets where home prices are still relatively affordable, 2016 may be a good time for some renters to take the plunge into homeownership before rising prices and possibly rising interest rates make it increasingly tougher to afford to buy a home.”

Note to sellers: now is a good time to make your move too. Buyers are looking and it’s still relatively affordable for most. A larger pool of buyers equals more chances to sell for top dollar.

Rents expected to continue rising.

Rents aren’t going down anytime soon. Central Florida is a very desirable locale for many (just ask your neighbor who moved here from New York) so people are going to continue to make the sunshine state their home. With demand increasing rents are likely to follow suit. The Orlando Business Journal cited ABODO’s National Apartment Report for February 2016 as showing Orlando rents for a one bedroom rising 13 percent from January to February this year. That’s a month-to-month statistic but indicative of a larger trend of rising rents both locally and nationally. Stan Humphries, chief economist at Zillow, had this to say as published in a Forbes article Feb. 24: “Rental appreciation has been a freight train these past few years, chugging along without any appreciable slowdown. Since 2000, rents have grown roughly twice as fast as wages.”

Given the consensus of experts, economists and raw data, the clear story here is yes it’s cheaper to own a home in Orlando, Winter Park, Maitland and Seminole County than rent one. It’s also consistently been shown to be a trend that is expected to continue. I agree with those that say the buck has to stop somewhere in terms of pricing. The market is already seeing some corrections in terms of appraisers holding hard and fast to recent sales and placing less emphasis on more ephemeral items such as upgrades and finishes when determining value. It seems the appraisers didn’t forget the market crash either! This is a good thing in that I don’t expect anything like the previous catastrophic flop of home values in the foreseeable future. So rest easy if you are pondering a home purchase. It is more affordable to buy than rent in Orlando, and the sky is not falling after all.

Christina Rordam is a licensed Realtor and Central Florida native with 10 years experience helping Orlando area buyers and sellers achieve their real estate dreams. She is a member of the Orlando Regional Realtor Associations Top Producer Club and holds the CDPE, CNE and CSP designations. Do you have any questions or a topic of interest that you’d like to read about? Contact Christina at 407-928-8294, [email protected]. View homes online at ChristinaSellsOrlando.com.