Exclusive: House hunting in South Florida? Here’s the salary you need to afford a home
How much does a Miami-Dade County household need to earn a year to afford to buy a house in this overheated housing market? It’s an astounding salary required to join the home ownership club.
People looking to buy a home in South Florida have to make $131,714 annually to afford a property at the median sales price of $589,000 for houses in Miami-Dade, Broward and Palm Beach counties, according to a report by the mortgage site HSH.com using housing data from the National Association of Realtors.
The figures used in the report are as of June 30 and assume buyers are getting mortgages and making a 20% down payment.
Buyers who only put down 10% when getting a home loan would need to earn $152,788 a year to buy a house in South Florida, according to the HSH report.
The minimum salary entry to buy homes in the region priced in the midpoint range is more than double what most households are getting paid — a key point underscoring the severity of South Florida’s home-affordability crisis. Households earn median salaries of $53,975 annually in Miami-Dade and Broward counties, according to the latest U.S. Census Bureau statistics.
“It’s not a housing issue. It is primarily an economic issue, which comes down to salary and wages. We have stubbornly low wages here,” said Ned Murray, housing expert and associate director of Florida International University’s Jorge M. Pérez Metropolitan Center. “We’ve seen a labor shortage. That labor shortage is only going to get worse.”
To that end, the annual salary necessary to afford to buy a South Florida house at the median price increased from the first quarter ending March 31 to the second quarter ending June 30, due to the continuing pandemic run-up of home prices. HSH reported buyers here during the first three months of this year needed to make $103,744, with a 20% down payment or $121,075, with 10% down, to afford a $530,000 median-priced house.
As lenders hike interest rates on conventional mortgages after the Federal Reserve keeps boosting its benchmark interest rate, home ownership is going to get even more elusive for most area residents unless their salaries keep increasing.
The HSH report compared the household salaries required to buy single-family houses in the 50 largest U.S. metropolitan areas. The Miami metro area ranked No. 14 based on required household annual pay to buy homes at the median price, behind of course several California cities, Manhattan and Boston, to name a few. The San Francisco Bay Area, where you need a $250,000 salary to buy a house at the median price, was by far the highest annual pay necessary.
All the metro areas in the top 15 cities where highest salaries are required to attain home ownership share the same disparity between lower wages and the lofty average household incomes needed to afford a home.
Single-family home prices have climbed steadily from $485,000 in September in Miami-Dade and from $485,000 in November in Broward, according to monthly sales reports from the Miami Association of Realtors.
The runaway prices are caused mainly by the continual stream of wealthy transplants from across the country that have sought lower taxes, year-round sunshine and lax COVID-19 regulations throughout the ongoing pandemic that started in March 2020. Among the people moving here are digital nomads, executives and employees following their company’s relocation or expansion to South Florida.
All the competition to buy homes has pretty much priced out native first-time buyers. Recent Nova Southeastern University graduate Jonathan Zobel works on a private yacht and had looked for his first home since January. He finally found a place this summer, but had to turn to his parents to buy it.
His mother, Boardroom PR Founder and CEO Julie Talenfeld, said she and her husband stepped up to pay cash for the $495,000 one-bedroom, one-bathroom condominium in Edgewater’s Iconbay Condominium. Her son couldn’t afford even half of the required down payment for a mortgage.
“You think because you put them through a nice college education you think they would be able to do that,” Talenfeld said of buying a home in Miami. “People are going to have to head north of Broward County to afford a place to buy. It is a shame.”
Most longtime local residents don’t get paid enough to have the money for a down payment on a home, much less pay cash for it. While FIU’s Murray said 70% of workers in Miami-Dade earn $30,000 a year or less, plenty of wealthy residents and outside buyers are paying cash to land houses in this hotly competitive market. In July, 41.3% of total home sales in Miami-Dade and 41.8% of them in Broward were cash deals, far greater than the 24% national average.
“We need better housing policies to build more accessible opportunities for home ownership,” HSH.com Vice President Keith Gumbinger said, noting mortgage subsidies and grants to buyers to cover down payments. “The way the current market is structured that’s not going to happen.”
Elsewhere in Florida, Tampa also has seen rapidly increasing home prices. The go-to city for many South Floridians trying to escape the local cost of living crunch has a median sales price of $411,000 for single-family homes as of June 30, up from $379,900 in the first quarter. To buy those median-priced houses, Tampa residents have to earn $93,397 a year and put 20% down on a mortgage.
Looking to buy a house at the median-price level in the Miami metro area? Here’s the financial checklist:
▪ Median price of a single-family home: $589,000.
▪ Salary needed to qualify for a conventional mortgage with a 20% down payment: $131,714.
▪ Salary needed with the mortgage and a 10% down payment: $152,788.
This story was originally published August 18, 2022 at 3:25 PM.
