‘It is frustrating’: Miami-Dade’s middle class priced out of housing market
Single mother Sarah Thompson is frustrated. The Jamaica native has lived in Miami for most of her life and since 2019 has been looking for a condominium to buy in Kendall, without any luck. Surging prices have blocked her from attaining homeownership.
“It is frustrating,” she said. “It’s been challenging to say the least. Prior to looking now, I’ve tried two other times and it’s gotten worse honestly.”
Thompson is one of many Miami-Dade middle-class residents left out of the booming housing market, unable to afford the lofty prices. Since only an estimated 8% of Miami-Dade County residents have the financial means to buy a home at the median sales price, shopping for one comes with many letdowns and remains futile for many people.
Although the county’s midpoint price for a single-family home retreated slightly in January, it still stood at $520,000 — out of reach for most locals.
Thompson, 37, first started searching for a home to buy after she moved into her Kendall apartment three years ago. She worked with a real estate agent to no avail. She found that she didn’t have enough money saved at the time for a down payment on a condo, and decided to wait before looking again in 2020.
Thompson prefers living in Kendall because it’s close to her daughter’s school. It’s also near the University of Miami, where she works as a senior-sponsored programs specialist on research projects for the college administration.
After making five offers for different properties in the area without landing one, she considered moving north of Miami-Dade to somewhere more affordable. However, the warm weather and her daughter’s connections to Kendall kept her from relocating.
“I’m at the point where I’d be open to that,” she said of leaving. “I’m kind of exhausted at this point. ... What’s keeping me here is my daughter’s school. She’s the only child and her friends are here. She goes to a magnet school.”
Cash buyers have the advantage
Thompson would be a first-time home buyer and as such is eligible for certain special loan programs. She has learned though that those financial incentives are no match for the growing number of cash buyers who can quickly scoop up homes without having to go through the mortgage approval process.
And she’s found that many residential properties in the Miami area carry high price tags even though they have not been renovated, adding more expenses after purchasing them. She’s hesitant to buy a home that needs significant repairs.
Many of Thompson’s friends have left for less expensive places outside Florida, like Colorado and Texas. A friend in Texas regularly sends her TikTok videos of large houses there that cost much less than the ones in Miami.
“It can be disheartening sometimes,” she said. “You do work hard and want to get to the point where you want to establish something for yourself.”
Realtor Maria Carillo of The Keyes Company has been working with Thompson for over a year to find a home she can afford to buy. Carillo works with clients of all financial backgrounds and has noticed that cash buyers have a big advantage over everyone else that needs a mortgage in this frantic housing market. Making it more difficult for the middle class, the cash buyers have emerged in far greater numbers in Miami during the pandemic from different parts of the country — particularly California.
Underscoring that cash is king, 40% of the homes sold in Miami-Dade in January were cash deals, while 41% of overall sales in Broward County involved no mortgages, according to data from the Miami Association of Realtors. Both figures are much higher than the 27% national average for cash home purchases.
“We have a lot of cash buyers,” Carillo said. “The ones I’m dealing with most are from the Northeast or California. With the people from up north, especially from New York and New Jersey, there’s always been an interest in Miami and South Florida. The Californians to me are fairly new.”
She also has seen in this hot regional housing market how quickly homes go from listings to sales. Therefore, she tries to prepare her clients for the possibility they may not be able to land a home in this ultra-competitive situation.
Indeed, Miami-Dade’s slim housing inventory shows that the area has only 1.8 months’ supply of single-family homes available to buy and 2.9 months of condos, according to the latest figures from the Miami Realtors’ group. In a balanced market, there’s typically four to six months of inventory of homes and condos for sale.
“You may not be able to find something,” Carillo said. “You have to have a Plan B.”
Six-figure salary, yet unable to afford a house
Anthony Nunziata, 45, and his wife, Carolina Penafiel, 43, previously lived in New York City before moving 18 months ago to the home they rent in Hollywood, in Broward County. They owned an art studio in New York and assumed that buying a house in South Florida would be much easier than in New York.
Nunziata is the vice president of asset management and development for a family-owned real estate investment trust. Penafiel has a part-time job transporting tourists in Miami Beach. Nunziata took a pay cut by moving to South Florida, where he earns $100,000 a year, with up to $25,000 more in bonuses. While he earns three times the average salary in Miami-Dade County, he still can’t afford the type of house he wants for his family.
“I make a little over $100,000 a year. My partner has a part-time job and my son is in a private school,” he said. “I’m priced out of homes. It’s shocking how much people are trying to sell their homes for. There’s not really a rhyme or reason for the pricing increases.”
New research from Florida Atlantic University economist Ken H. Johnson and Florida International University real estate professor Eli Beracha shows that home prices have jumped to the point that in Miami homes are 23% overpriced, compared to only 3% a year ago.
Nunziata is looking for a house close to Miami Beach, Miami Shores or Biscayne Park. With his salary, he can’t afford to move any closer to Miami than Hollywood, about 20 miles north in southern Broward County.
He’s looking for a three-bedroom, 1,700-square-foot house. He wants that space, because he and his wife have two large dogs and they need room for Penafiel’s family who come to visit from Chile.
The maximum a bank will lend him is $550,000. He can’t find a home for that price in the areas where he wants his family to live. The least expensive option he’s found was a 1,700-square-foot house without air conditioning in Miami Shores for $650,000.
Another obstacle in the way for middle-class home buyers like Nunziata is the great amount of houses in Miami-Dade being bought by high net worth individuals or investors, who convert the homes into short-term rentals via Airbnb. A home next to the one he and Penafiel lease is often rented on Airbnb, and he’s noticed many more in their neighborhood.
There is extra pressure for Nunziata to find a home to buy for his family by May. The landlord that owns the house he and his family rents is moving back to South Florida then, posing a possible dilemma.
“The market has got to correct itself,” he said. “Some people buying for an investment aren’t going to be able to command rents they need to pay for that mortgage and maintenance of the home and profit for themselves. I don’t think someone will rent for $5,000 a month in these neighborhoods.”
State leaders need to prioritize workforce housing
Grant Stern, Morningside Mortgage president and a mortgage broker, works with Miami home buyers and is familiar with the area’s dwindling housing supply. He thinks that more support is needed from the Florida Legislature to entice developers to build more less-expensive workforce housing in South Florida.
“Structural issues make me see rising prices for the foreseeable future,” Stern said. “Also, the rise in rents is justifying single-family homes as owner-occupied products. There are powerful reinforcing mechanisms there.”
Stern attributed Miami’s housing woes to Florida’s constitutional prohibitions on housing control, which means the overheated residential real estate market’s inequities have to be resolved by the private marketplace. In order for that to happen, he said elected officials need to pass legislation stimulating affordable housing development.
“That impact is you’re not going to get really good housing policy out of our elected officials, unless there’s a really concerted effort to force them to come to grips with this [housing affordability] crisis,” Stern said. “New York City has inclusionary zoning. You’re going to need to see meaningful incentives for workforce housing [in South Florida], which is housing for people that can afford to live somewhere that are getting priced out.”
Meanwhile, the home lending executive thinks the City of Miami has essentially been fully built, yet residents have fewer affordable options to move to a different neighborhood than they’ve had in the past. Areas such as Homestead, a far southwest Miami suburb, have caught up to others in price, don’t have significantly more homes for sale and lack the space to do mass development.
Forced to spend more in order to buy
Commuting from Kendall to Miramar before the pandemic played a significant role in Keri Perez, 30, and her fiancé Damian Hernandez buying their house in Cutler Bay last fall. As Perez worked from home in project design for a telehealth company, one of the two bedrooms in their Kendall condo became Perez’s office. With plans to start a family, the couple knew it was time to move.
In 2020, the couple began looking for a home to buy in the mid-$400,000 range. That year, prices in the local housing market began to increase and put the couple in a position to sell the property they lived in for its full price.
Hernandez, 40, is a nuclear medicine technologist and bought their Kendall condo in 2017. The equity he had accrued gave him and Perez more buying power as they searched for a house.
“We know it’s been hard for many people and thank our lucky stars and God,” Perez said. “We could be one of those couples out there every weekend going to open houses and not having luck. No one knows where the market will go, and if it will burst or go up and up. The best thing was to try with what we had.”
Perez and Hernandez were not initially aggressive enough in their housing search. However, after going to multiple showings with long lines of people outside of homes for sale and having their offers outbid by tens of thousands of dollars, they realized they needed to change their approach. Perez earned pay raises at her job that allowed her and Hernandez to move up market to look at more expensive homes.
“We quickly realized the market wasn’t what we expected and the strategy had to change,” Perez said. “Between then and now, I got some raises that opened our budget up a bit. Once we entered a different bracket of price points, the cost wasn’t as much. Those homes were getting purchased really quickly.”
Eventually, Perez and Hernandez closed on their Cutler Bay house for $575,000 in October 2021, a price nearly $150,000 more than what they originally planned to spend on a new home.
This story was originally published February 27, 2022 at 6:15 AM.
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