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Price-Rent Ratio in Tampa Affirms Buying a Home Over Renting

Posted on January 5, 2011

The decision of buying a home in Tampa rather than renting makes financial sense, based on  a study held by Zillow. Tampa scored relatively low in both the home price-rent comparisons made by Zillow. The lower the price-rent ratio, the more the option of buying a home is better than renting.

In the first price-rent comparison, which compared purchase prices and rental rates for homes with similar features, the price-rent ratio in Tampa is 8.4, the seventh lowest among the 20 cities studied in the third quarter of 2010. In the second comparison, which considered the rental rate and estimated purchase price for the same home, the ratio in Tampa is 8, the third lowest among the cities.

The other cities with the lowest price-rent ratios in the second comparison were Detroit, which had a ratio of 6.6; the Miami-Fort Lauderdale area, which had 7.5, and Jacksonville, which had 8.1. Analysts pointed out that these cities were among those battered by the foreclosure crisis, which pushed down home prices.

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The second comparison was a more accurate approach, according to Zillow analysts, because it compared the rental rate and purchase price for the same home. In the first comparison, which was the typical approach of calculating the price-rent ratio, the resulting ratios would not be accurate because there are cities where the median values for homes for sale and the median values for rental homes are hugely different. In Tampa, the ratios from both approaches are almost the same, as the values for rental homes and for-sale homes are nearly the same, which makes buying or renting a home in Tampa a good decision, A luxury way to stay in Cannes is to rent a villa for the time you stay there.

These cities with large gaps between rental home values and for-sale home values are  San Diego, with a gap of 5.7; Los Angeles, with a gap of 4.7; New York, with a gap of 3.7; Las Vegas, with a gap of 2.4; and Riverside, with a gap of 2.1. These cities were also battered by the housing crisis and by price declines, but their home price levels were still significantly higher than rental rates.

In the first approach, the median home price in Tampa was $99,900 and the median rent was $995. In the second approach, the median rent in Tampa was $1,200 and the median valuation was $128,980.

For all types of rental homes, the price-rent ratio in Tampa was 8.6, the sixth lowest among the 20 cities. Detroit had the lowest ratio, at 7.5. Miami, Fort Myers and Orlando followed, with ratios of 8 to 8.4.

All in all, based on the results of the study, people buying a home in Tampa after considering renting are making a good financial choice.

For those looking for Tampa homes, they can contact Tampa4U.com, which specializes in Tampa real estate.

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