Jason Wood has lived in an apartment on 12th Street and West Avenue in Miami Beach for more than a decade. Come July, he’s packing it in.
In the past five years, rent for Wood’s one-bedroom, one-bathroom apartment rose by more than 60 percent, to $1,800. More than 40 percent of his income as territory manager for a local furniture company goes to rent — well beyond the 30 percent that the Consumer Financial Protection Bureau recommends be allocated for housing costs.
Many across South Florida face a similar scenario. According to a report released Tuesday by online real-estate marketplace Zillow, the percentage of income dedicated to rent has skyrocketed in the past decade.
“Miami wants to grow as a major city, and you can’t do that if … rent just keeps going up and up and up and people are forced out of their apartments,” said Wood, 46.
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Before the housing bubble, renters across the Tri-County area spent roughly 28.5 percent of their income on rent. At the end of 2015, that number had jumped to 43.8 percent.
In some areas, the share of income funneled toward rent is even higher.
In Miami Beach, renters could expect to pay 56.9 percent of their income on rent at the end of 2015. Fort Lauderdale renters spent about 45 percent of their income on rent during that period, while in West Palm Beach, rent accounted for about 43 percent of renters’ incomes.
According to the report, the Miami metro area is the third-least affordable for renters across the country. Los Angeles ranked No. 1, with rents at 47.6 percent of income; San Francisco ranked No. 2, with rents at 46.1 percent of income. The New York area came in at No. 4, with rents at 41.4 percent of income.
The underlying problem: As rents have risen, wages have remained stagnant, said Jack McCabe, an analyst who studies the local real-estate market.
“You can make a pretty good case that, by and large, household incomes here have been flat or declining over the last eight years,” he said about South Florida.
Statistically, median household incomes in a majority of South Florida counties have declined in past years, according to the U.S. Census Bureau. Since 2009, wages in Broward County have decreased by .3 percent, while in Palm Beach, wages have fallen 1.2 percent. Median incomes in Miami-Dade grew by 15.7 percent, to $43,099 in 2014 from $37,226 in 2009.
Rents, on the other hand, have steadily climbed, surpassing wage growth in Miami-Dade and despite the 2008 recession and the housing crash, which sent home prices plummeting.
“Rents never really [decreased like home prices did] because there were more people being forced out of their homes and having to rent. There was growing demand … and that pushes prices up. That’s why we’re seeing so many companies and institutional investors pumping money into rental properties,” McCabe said.
Buying a home is relatively affordable, thanks to low interest rates. But saving for a down payment has become more difficult as rents continue to rise.
“That’s when you get to that breaking point,” McCabe said. “What good does it do to live in paradise if we can’t enjoy it?”