To college students looking to rent their own place, it seems the tides are turning in their favor.
The FAU College of Business’ latest national study found that renting instead of buying a house will save money in the long run.
This is due to the fact that rent prices are slowing while house prices are increasing.
The study showed an average annual increase in home prices of 5.7 percent. In comparison, the average U.S. apartment rent price increased just 1.5 percent, the slowest growth rate in the last three years.
According to Ken Johnson, study co-creator and associate dean of the business college, it’s more beneficial long term for potential buyers to rent and reinvest their savings in stocks and bonds instead of buying property.
Johnson added that renting gives college students and recent graduates more flexibility when it comes to moving for their jobs.
“[Renting] allows for greater job search mobility. Said another way, to rapidly advance in a career, it is very often necessary to be mobile — to be able to leave one city for another rapidly in the event of a better job placement,” Johnson said. “Ownership, in the early stages of a career, slows down this ability.”
Not only do students avoid mortgage payments when they rent, they don’t have to deal with a down payment, maintenance costs or property taxes.
The study analyzes the cost of buying versus renting in 23 of the largest cities in America, indicating that it’ll be cost effective to rent rather than buy in parts of South Florida like Miami.
“For new graduates, it is almost always smarter to rent and reinvest,” Johnson said. “Regardless of an individual’s decision, he/she should always be saving … The absolute incorrect thing to do is rent and not save.”
Thomas Chiles is the features editor of the University Press. For information regarding this or other stories, email [email protected] or tweet him @thomas_iv.