Many South Florida residents have, at some point in life, found themselves facing the seemingly timeless question of, “Is it better to rent or buy?” Of course, the answer is almost always “it depends.” For example, the dynamics of the local South Florida market are quite a bit different than they are in many other areas of the country. In the local market, rental property is heating up right now. But, will the interest in rental property have an impact on buyers and sellers in the residential real estate market?
There are many parts of Miami where rental rates are rising due to increased interest. Residential development has resulted in quite a few new condo towers in that area, and those condo owners have turned to renting out their units to tenants. The issue to figure out now is how those tenants — the ones who have chosen to rent rather than to buy — may impact residential property.
A common assumption might be that sales prices might dip a little bit as sellers attempt to entice people more toward the “buy” decision rather than the “rent” decision. But, the reality is that this decision oftentimes is not driven by financial concerns — the concern about getting a “good deal.” It can be driven by the appeal of holding a short-term interest in a piece of property, allowing for increased mobility.
The real point is that any real estate market has a number of dynamic factors that are constantly shifting. Any one particular factor could play a role for a buyer interested in a piece of property in South Florida. In Miami, it appears that the interest in the rental market needs to be accounted for in at least the short term. And this could present buyers with unique legal issues as they explore their housing options.
Source: Miami Herald, “South Beach, Greater Downtown Miami: one big rental market?,” Peter Zalewski, March 7, 2016