Now, following the epic housing crash and with interest rates at record lows, economists and financial planners say it might be time to rip up that annual rental lease for a more long-term, at least eight-year, commitment to buy.

But the decision often has as much to do with personal circumstance as real estate’s financial ups and downs, and individuals have many issues to weigh when considering the benefits of buying over renting.

Of course, it’s also all predicated on whether a potential buyer can even get financing from banks still struggling with bad boom-time loans.

In Pearlman’s case, the rigors of keeping up an 84-year-old home have become a burden, and she and her husband eventually want to move west to Wellington where they hope to find a larger piece of land.

An unsure market, however, is also a driving force in making the couple renters again.

Pearlman said the argument against renting is always “you’re throwing money away” while earning no equity, but she figures there’s no harm in renting for a year to see where the market settles out.

“My husband wants to rent because he just doesn’t want to take a chance right now,” Pearlman said. “Look, you can get a nice house for $1,250 a month, no homeowners association payment, no property taxes, no lawn care, no responsibility.”

Doing the math

Andres Carbacho-Burgos, a Moody’s economist, said there’s little doubt that renting in South Florida was a better bet during the peak years of 2005 and 2006.

“What has happened since then is the housing prices have come down by a lot more than the costs to rent an apartment,” he said.

To illustrate that, Carbacho-Burgos looks to a price-rent ratio that considers the buy-versus-rent question in a more mathematical way. The ratio is calculated by taking the median cost to buy a home and dividing it by the annual cost to rent.

A price-rent ratio less than 20 is generally considered a sign that it is better to buy.

For example, if the annual rent on a three-bedroom, one bathroom home is $15,000, and a similar home is selling for $200,000, the rent ratio is 13, favoring buying as the better option.

According to Moody’s, the average price-rent ratio using apartment rents in 2006 in Palm Beach County peaked at 31 but was down to 18 in the first quarter of this year.

But that number isn’t perfect. Theoretically, the calculation should use home rental rates, which aren’t easily available in a uniform format for specific areas.

Also, the 18 ratio is based on using median home prices from the National Association of Realtors, which can be fickle and quick to change depending on the volatility of the market.

Carbacho-Burgos said if the S&P/Case-Shiller home price index is used, Palm Beach County’s price-rent ratio today is about 15. The S&P/Case-Shiller index calculates prices monthly using a three-month moving average. It also uses data on properties that have sold at least twice in order to capture the true appreciated value of each home.

“I can’t answer the question in absolute terms, but the ratio is much closer to the norm now than at the peak of the housing market bubble,” Carbacho-Burgos said.

A more complex evaluation of whether it’s better to rent or buy in today’s market can be completed using one of many online calculators. Most of these calculators consider mortgage rates, down payments, tax breaks and closing costs when figuring the ratio. Some go as far as calculating annual maintenance on a home, monthly rental insurance and your personal rate of savings.

At Lendingtree.com, the calculation favors buying a $200,000 home as opposed to renting at $1,100 a month under the following circumstances: the buyer puts 20 percent down on a 30-year loan with a fixed 4 percent interest rate, and plans to stay in the home for at least five years.

Thinking long term

While the total cost to own the home in the first year far exceeds the rental payments, after five years the net cost to own is about $51,000 compared with paying $66,900 to rent.

“You should look at a house as something you want to live in, not a get rich quick thing,” said Barry Rabinowitz, a certified financial planner and principal of BER Financial Group, LLC in Plantation.

Rabinowitz recommends buying a home now if a person plans to stay in it for five to eight years.

“The days of houses going up in value 25 to 30 percent is not realistic, but neither is the other extreme of them going down that much either,” he said.

In July, Palm Beach County’s median sale price for a single-family home was $226,000, an 8 percent decrease from July last year, but down 42 percent compared with the price in 2006 of $390,100.

Rabinowitz’s recommendation is also based on itemizing deductions on a tax return, which allows a homeowner to claim mortgage interest and property taxes.

The mortgage-interest tax deduction doesn’t eliminate the cost of borrowing money, but it does reduce it.

“When you rent a house, nothing is deductible,” Rabinowitz said.

How much can be deducted depends on the mortgage interest paid each year. It is also important to consider what your standard deduction is for the year depending on age, marital status and income bracket. For example, the standard deduction for married couples in the 25 percent tax bracket and filing a joint return is $11,400 for 2010. If your mortgage interest was $11,520, for example, you get a slightly higher deduction, but you have to pay $11,520 in interest to receive it. The standard deduction for single filers for 2010 is $5,700.

House vs. condo

Answers to the rent vs. buy question also vary dramatically depending on whether it is a condominium or single-family home.

Peter Zalewski, a principal with Miami research and brokerage firm Condo Vultures, said you can buy an average condominium today in Palm Beach County for about as much as it would cost to rent it.

Single-family homes in neighborhoods on the upswing, however, are going to be more expensive in the first several years.

“If a buyer is looking at a five- to eight-year hold and understands different neighborhoods, buy today,” Zalewski said. “The likelihood is that single-family homes will recover quicker than a condo.”

And contrary to what conventional wisdom might say, Zalewski and Pearlman agreed that owners are not so desperate that they are offering rock-bottom rates on rental properties.

Renters should expect rates to go up between 3 percent and 5 percent each year, something that doesn’t happen with a fixed interest rate mortgage.

“If a tenant squeezes a landlord when the market is down, when it recovers, that landlord is going to squeeze back,” Zalewski said.

Copyright © 2010 The Palm Beach Post, Fla., Kimberly Miller.

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So if you are looking at going into restaurants, it has restaurants there. If you want to go to the mall, if you want to go shopping you could go to Citrus Park Mall they have the movie theater, they have the shopping, they have more restaurants, it is not too far away and of course the International Mall and different areas in and around South Tampa are relatively close as well. So I definitely recommend the Westchase area.

The biggest downfall and this is not really a downfall, but is it is more expensive than a lot of other areas in Tampa. You are going to pay more to live there than you will in Lutz, in New Tampa, in Wesley Chapel, and Land O’ Lakes because it is just so convenient to a lot of people.

You may also want to take a look at: New Tampa homes :: Wesley Chapel homes :: Land O Lakes homes :: Lutz homes :: Fishhawk homes :: South Tampa homes :: Brandon homes :: Apollo Beach homes

You have other communities that are really nice in Wesley Chapel. Lexington Oaks is a golf course community, you have of course the famous Saddlebrook Resort and Golf Club and you have Saddlebrook Village which is on the other side of I-75. There are just a lot of really nice communities in Wesley Chapel and that is where all the growth is going. They have two new malls, a movie theater, and tons of restaurants going there.

The other good thing about Wesley Chapel is for the people who work in South Tampa, it is above I-75 and I-275 split. So if you are working in South Tampa you do not have to go to take I-75 to I-4 to I-275, you just take I-75 down, get on I-275 and it puts you right into New Tampa. In a lot of cases Wesley Chapel is actually a shorter drive, time wise, than most of the homes in New Tampa would be and even other areas that might seem a little closer like Lutz or Odessa.

So there are certainly a lot of advantages and I think the main thing is it is a younger town, it is very vibrant, there are a lot of things to do, it is very child friendly and there are lot of the new communities. Homes in Wesley Chapel could range anywhere from the low $100,000 and if you are in Saddlebrook into millions of dollars.

So it is certainly a good choice if you want to be in an up and coming area and certainly when the next real estate boom continues it is going to continue right through Wesley Chapel. As a matter of fact, if you went out to Wesley Chapel you would never know over the last several years we were in a recession.

You may also want to take a look at: New Tampa homes :: Land O Lakes homes :: Lutz homes :: Fishhawk homes :: South Tampa homes :: Brandon homes :: Apollo Beach homes

The downfall in Valrico for a lot of people is the drive; it is quite a distance off I-75 so if you are working in South Tampa or somewhere in the Downtown Tampa area it could be quite a drive. You are pretty much going to have to go through Brandon, which tends to be very congested.

If you like to be in that area, if you like more matured homes, more matured areas, I think Valrico homes will be a really good choice for you.

You may also want to take a look at: New Tampa homes :: Wesley Chapel homes :: Land O Lakes homes :: Lutz homes :: Fishhawk homes :: South Tampa homes :: Brandon homes :: Apollo Beach homes

So let us start off with the highlights of Riverview. The first thing is it is in the southern part of Hillsborough County, which is really convenient for people who might be working at MacDill or Brandon, in that area. It is a newer community, there are a lot of new homes, there are a lot of kids out there, a lot of things to do and it is relatively close to the beach compared to some other places like New Tampa, Wesley Chapel, and Plant City. You could get a lot of bang for your buck there. A lot of people who are working in South Tampa or the Downtown Tampa area have a hard time affording anything in that area and if they go to some nicer newer areas a little further north like Westchase it is just really expensive. When they start getting into other areas like Land O’ Lakes, New Tampa, and Wesley Chapel they tend to be a little further out there. So a lot of people opt for the Riverview area. It is very affordable; you could get a lot of bang for your buck out there. Where a home in Riverview that is $200,000, if someone were to go to West Chase that same home would probably be around $275,000, and if they were going to go to New Tampa it would probably be somewhere in the area of $240,000, so you could really get a lot of bang for your buck. Now, there are some really highly trafficked areas in Riverview.

Pavilion and Lake St. Charles are two really nice communities that are right off I-75 and US Highway 301; they are in the northern part of Riverview. Some other areas a little further south are Panther Trace, South Fork, and Summerfield Village. Now Panther Trace and South Fork they are still building there. Summerfield Village is a golf course community that is a more established area.

Sometimes the downfall of Riverview, what people notice is they have to drive if they want to do anything. If they want to go see a movie, they have to go to Brandon. If they want to shop, they have to go to Brandon. Though there are some restaurants in Riverview there are not very many and you are probably going to have to go to Brandon or at least that is the closest place to go if you want some good food.

Again, Riverview is a very nice area, there are a lot of kids, there is a lot of development, a lot of new homes out there, but a lot of people tend to have to drive quite a ways to get anywhere. Again you could get a lot of bang for your buck, which is really nice. Your money goes a long way and it is a relatively very nice community. It certainly beats some of the options on price compared to areas like New Tampa or Westchase.

You may also want to take a look at: New Tampa homes :: Wesley Chapel homes :: Land O Lakes homes :: Lutz homes :: Fishhawk homes :: South Tampa homes :: Brandon homes :: Apollo Beach homes

You may also want to take a look at: New Tampa homes :: Wesley Chapel homes :: Land O Lakes homes :: Lutz homes :: Fishhawk homes :: South Tampa homes :: Brandon homes :: Apollo Beach homes

• Your house would get an instant makeover, with a slight change in the landscape. To begin with you can keep your grass cut and clean, to give a dramatic uplift to you house. In fact, you can even add extra grass, to make it look healthy.
• When renovating your house so that it sells well, make sure that spending too much on renovations, wouldn’t give you an out of this world result. Remember the location and the property value (of the same kind) of your neighbors and spend accordingly. To begin with you could spend on things that improve the outer look of the property, like spending on air conditioning, painting the outer walls, getting new sprinklers; all add value to the property.
• One very good, way to attract potential buyers, is by making your home energy efficient. Installing solar panels, installing low flow toilets are very good ideas, to entrap a potential buyer.
• Other things that could spruce up your house would be repairs in the kitchen, bathroom, removing broken or old sinks, replacing old taps, worn out plastering can all add to the value of your property significantly.

But remember, don’t overdo this. Any good real estate agent should be able to tell you, the percentage of money that you can safely spend expecting a safe return on investment. Most people coming to buy a certain property judge the price by the price of the corresponding property in that area. Remember, the changes should be reasonable. You could follow this basic thumb rule. Renovate your home, so that its value increases by about 20%, than the costliest home in the same area.

That’s because when real estate agents, estimate the value of your property, they base their decision on two factors: Features and the condition of the property. Features mean things like the number of rooms, bathrooms, finished landscaping, finished basement etc. Condition refers to scale of repairs that a prospective buyer would have to undertake if he purchases your place. Make sure that the condition is such that minimum repairs and replacements would have to be undertaken. The features should be such that it should be unique to your neighborhood. If it’s too much, it’s possible that you end up reducing its value.

Thank you for reading our Tampa real estate post. If you have any questions about Tampa luxury homes or Tampa home values please give us a call.

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So if you are looking for an active adult community, I think Sun City Center would be a perfect place for you.

You may also want to take a look at: New Tampa homes :: Wesley Chapel homes :: Land O Lakes homes :: Lutz homes :: Fishhawk homes :: South Tampa homes :: Brandon homes :: Apollo Beach homes

Also if you are looking for luxury homes in Tampa, there are just tons of luxury home communities, areas like Westshore Yacht Club, Hyde Park, Palma Ceia, Beach Park, Sunset Park, and Culbreath Isles.  When it comes to condominiums whether you want to be over in the Channelside area or you want to be in Harbor Island or if you want to be in Bayshore, there are just a string of high-rise condominiums and very, very luxurious condominiums on Bayshore that have both the city and the ocean view.

The downfall about South Tampa and it is like this in any downtown area, it is very expensive for what you get, because keep in mind this is the nucleus of the city and the lots are expensive.  Give Hyde Park for example, if they are in Hyde Park and it is a little teeny home usually someone will buy that home, rip it right out of the ground and build a mansion there because the land is so valuable.  If you buy a home for $120,000 you have to understand the land is the major value not the home.  There is also a community hospital; Tampa General is on Davis Island which is real convenient.  There are some little parks there; there are all kinds of shopping and restaurants, there is just everything.  As far as downtown areas go and all of South Tampa the downtown area in Tampa is relatively nice.  Unlike a lot of cities out there that have a lot of people sleeping on the street, a lot of homeless people, there is not a lot of that in Downtown Tampa.  So it makes for a really nice option for people who want to live there.

Like I said, the biggest problem is, you are not going to get nearly the bang for your buck in the South Tampa area or communities that you will a little further north, south, or east.  You are going to get a lot more bang for your buck. In areas like New Tampa, Westchase, or Riverview.

You may also want to take a look at: New Tampa homes :: Wesley Chapel homes :: Land O Lakes homes :: Lutz homes :: Fishhawk homes :: Brandon homes :: Apollo Beach homes

Over on the east side of Land O’ Lakes a really nice golf course community is Plantation Palms.  Valencia Gardens is also a nice community.  If you like the more matured communities and you want to be on a lake, you might look at Lake Padgett.  If you are looking for luxury homes in Tampa, Sunset Lakes off US Highway 41 is a really good option and continuing north Wilderness Lake Preserve is a beautiful community.

Land O’ Lakes overall is a very nice area, it is very conveniently located.  If you want to go to a movie you are real close.  Over in Wesley Chapel you have movie theaters, you have a lot of shopping with the new mall that is over there.  There are actually a couple of malls that went over in the Wesley Chapel area.  It is very convenient because you are north of the I-75 and I-275 split, so if you are going to South Tampa most people are going to go west on State Road 54 and just take the Suncoast Parkway or what is also called Veterans Expressway, it is a tollway, you could just take that south right in to South Tampa or Downtown Tampa.  So it is a very convenient place, a lot of really nice communities, a lot of bang for your buck, and it is very diversified as far as what they offer in their subdivisions and communities.