Renting home better than buying

Renting a home in South Florida beats buying one — assuming you’re a disciplined investor.

That’s the conclusion of the Beracha, Hardin & Johnson Buy vs. Rent Index, a housing barometer developed by professors at Florida Atlantic and Florida International universities.

The quarterly index, to be released today, looks at wealth creation, determining whether it’s more advantageous to buy and build equity or rent the same property and invest the money that would have been spent on a down payment and other costs of ownership.

Renting has topped buying for about two years in Palm Beach, Broward and Miami-Dade counties, largely because stock market gains have outperformed home-price appreciation, said Ken Johnson, an FAU economist and one of the index’s authors.

Still, buying is a good financial decision for many people, including families who want to put down roots and gain access to good school districts, Johnson said.

Americans traditionally have built wealth through buying homes, but ownership began to lose its luster as prices plummeted in South Florida and across the nation during the housing bust from 2006 through 2011.

More people appreciate the flexibility that renting offers and think it’s less of a risk than owning, said Ken Thomas, an economist and banking analyst in Miami.

But Thomas said many renters wouldn’t invest their savings, so buying is the better option for them.

“How do you know a renter wouldn’t take that savings and go spend it on a boat or a car?” Thomas said. “With a home, you have a forced savings.”

Outside South Florida, other metropolitan areas that favor renting include Pittsburgh, Portland, Ore., San Francisco and Seattle.