Real Estate News

Report: Miami one of least affordable housing markets for recent grads

The city of Miami skyline seen from the Port of Miami.
The city of Miami skyline seen from the Port of Miami. MIAMI HERALD STAFF

Raymond Pereira doesn’t want to live with his grandparents anymore.

But he can’t afford to move into his own place — at least not at today’s prices, not if he wants a bedroom of his own.

Pereira, a recent graduate of Florida International University who works full time, still doesn’t make enough to find what he considers decent housing near the urban core in Brickell or Midtown.

“If you want to live somewhere nice, somewhere that’s close to your job, easy to get to, close to the bars, you can’t find anything,” said Pereira, 24, who is crashing in an efficiency at his grandparents’ house near the Miami International Airport while he hunts for a new pad that won’t require sharing a bedroom with a roommate.

Recent college grads, beware: You’ll have a harder time finding an affordable apartment in Miami than in almost any other city in the country.

Fewer than one in 100 apartments on the market in Miami-Dade County are considered affordable for recent college graduates.

Only Portland, Oregon; Riverside, California; and Orange County, California are more expensive for young people, according to a study released Wednesday by the online real estate company Trulia.

“Although Miami has had a boom in multi-family construction in the last few years, much of that construction was at the middle and high end of the market,” said Ralph McLaughlin, Trulia’s housing economist. “The type of supply coming on the market is not affordable for recent college graduates.”

Trulia compared the area median income for recent grads ($25,778) with local rental rates and found that only .4 percent of all apartments would be affordable. (Affordable housing is generally considered to cost one-third or less of your income).

Pereira makes quite a bit more than that — $35,000 — at his advertising job in the Design District. But even he can’t find an affordable place within a reasonable commute. His trip to his grandparent’s home in the evening rush can take up to an hour.

“Anywhere else I would be able to afford a house, or at least a little apartment or something on my own,” Pereira said. “Rent is so high.”

In the nation’s most affordable markets, cheaper housing is plentiful. In St Louis, recent grads can afford nearly one in five apartments. Dallas, Houston, Atlanta and Phoenix also have plentiful housing, according to the study.

And things are getting worse in Miami. The number of affordable apartments fell by more than 40 percent over the last year, Trulia found.

Median rent in Miami was $2,200 in May 2015, up from $2,000 in May 2014. You’d have to make more than $86,000 per year to afford an apartment that expensive, if you wanted to keep your housing costs to a third of your total budget. Or bunk with three roommates, if you’re making what college grads typically earn.

The reasons for Miami’s high prices are clear: an influx of foreign money, escalating land prices and rising construction costs.

“We have an atypical market in Miami,” said Mitchell Friedman, a partner at the affordable housing developer Pinnacle Housing Group. “The private developer can really only get a reasonable rate of return in today’s climate by focusing on the luxury end.”

That means higher rental rates, at least until the market cools down. But land prices and construction costs haven’t shown signs of slowing down, and foreign interest in Miami real estate remains high, despite currency crises in Latin America and Europe.

“I don’t see the problem going away any time soon,” Friedman said.

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