Tampa Bay is known for our beautiful beaches, loads of sunshine, and pristine parks. It’s no wonder so many people want to call the Tampa Bay area home but if you opt to rent here you need to be prepared to pay up. The rental market is skyrocketing and landlords are getting top dollar for their properties.
RentRange.com tracks the data on rental market trends across the country. In a recent report, the company ranked the top 25 “U.S. Metropolitan Statistical Areas” comparing how much rent a property generated in the third quarter of 2015 versus how much the same property generated during the same time period in 2014. The result… Tampa Bay ranks 20th on the list.
“We continue to see substantial opportunity in real estate investing, but strengthening real estate markets in many regions require investors to be more informed before buying an investment property and rehabilitating it in order to achieve their desired return,” said Walter Charnoff, Chief Executive Officer of the RentRange business. “While, not surprisingly, California and Florida are experiencing the largest rental rate increases, further analysis reveals that markets in Alabama, Texas, Kansas and Ohio actually produce a much higher average yield.”
The report shows Tampa-St. Petersburg-Clearwater with a 10.3% change in rent in the third quarter with an average yield of 11.5%. Topping the list in the number 1 spot is another Florida city, Cape Coral – Fort Myers with a 23.6% change in quarter three rent. North Port- Bradenton- Sarasota also makes the top five list coming in at number three with a 17.2% change in quarter three rent.
Buying vs. Renting
A recent study released by Zillow reveals that right now buying is a better bargain than renting. The study found that renters should anticipate spending about 30 percent of their income on rent whereas buyers should set aside about 15% of their monthly income to pay their mortgage.
The study says it’s costing more than ever to rent a home. It used to be that 24.4% of a renter’s income would be needed to pay the rent until the end of 1999. Now, as mentioned above, it’s over 30%.
“In other words, renting a home is more unaffordable than ever, while purchase affordability is near all-time highs,” says Svenja Gudell, chief economist at Zillow.
The study goes on to say that even as the mortgage interest rates increase ,as many anticipate they will, the market will continue to favor buyers over renters. Even if interest rates reached 6% next year, according to the study, people buying homes will still spend less than 30% of their income on their mortgage payment.
“Looking forward, the picture doesn’t look bright for renters,” says Gudell. “Rents will likely keep rising at roughly their current pace for at least the next few years, which will lead to a continued affordability crunch unless wage growth significantly improves.”
What Renters Pay in Tampa Bay
Zillow tracks rent statistics for Tampa Bay on an ongoing basis. Currently, the average rent (meaning half of the real estate available for rent is higher and half is lower) for the areas largest cities is:
St. Petersburg: $1,250
Wesley Chapel: $1,470
Pinellas Park: $1,260
Historic Old Northeast demands the highest rent for a large neighborhood that is tracked by Zillow as of August 2015. Rent averages more than $2,400 per month. North Hyde Park in Tampa averages right at $2,000 per month and Tampa Palms comes in at a little more than $1,700 per month.
Trying to find something at these prices might prove impossible however. Some of the more popular downtown rental units in St. Petersburg will cost you nearly double the “average” rent price. Another issue is availability. Most of these complexes have only one floor plan available and the rest are on wait lists. Below are the current price ranges for a 2 bedroom unit in three downtown St. Pete rental apartment complexes:
Fusion 1560 – 2 bedroom unit – $1835-$2200
Modera Prime – 2 bedroom unit – $1990-$2570
Beacon 430 – 2 bedroom unit- $2249-$2749
Another interesting fact is what Zillow refers to as the “Breakeven Horizon”. This is the number of years you would have to live in a home before owning it becomes more economical than renting it. In St. Petersburg, according to the current Zillow statistics, you’d only have to own the home for 1.3 years before you would reach the Breakeven Horizon. For Tampa, it is currently 1.6 years and Wesley Chapel is 2.1 years.
To compare how affordable owning can be check out our mortgage calculator and run the numbers yourself. We’d be happy to answer any other questions you might have about the buying process. Give us a call or send an email today!