The swift transformation of Miami into a first-rate metropolis has had an undesirable consequence for many: the soaring cost of housing and the threat of a “brain drain.”
Yes, the rapid increase in residential prices is a boon for those who have acquired property for investment purposes, especially in places of international appeal, like the Brickell area and Miami Beach.
But as 2017 gets underway, a 2016 problem remains with us: for many of our local residents, finding affordable housing in Miami and other parts has become a mission impossible. If renting is hard, finding an affordable home to buy is out of reach. And that will bring unexpected consequences to our economy.
According to a recent article by Miami Herald reporter Nicholas Nehamas, “Buying a home in Miami-Dade is so expensive, it could hurt the economy.”
How? Well, hiring professionals from other less expensive places and convince them to come to work and live in Miami-Dade has become a problem.
According to a Bloomberg study, Miami ranks eighth among the nation’s cities with the greatest inequality between its residents’ incomes and housing prices, surpassed only by some California cities.
The difficulty of finding affordable housing in Miami is even greater than in expensive cities like New York and Boston, because although in these cities home prices are higher, so is the average income.
At the same time, the high cost of housing and the low increase in wages are increasingly squeezing the middle class. Not to mention recent college graduates who can’t find affordable apartments in Miami. Many many choose to continue living with their parents. And other local college graduates look for new horizons away in other states.
Now, business leaders are starting to worry that the skilled workers who power Miami’s diversifying economy will be lost under the tide of rising home prices, the article said.
South Florida seemed to have whipped its “brain drain” problem when housing prices plummeted during the recession. Between 2011 and 2013, the region’s population of 25- to 34-year-olds with a bachelor’s degree or higher grew at the eighth-fastest rate in the nation, according to research by the Center for Population Dynamics at Cleveland State University.
But now home prices have soared 59 percent since the market bottomed out in 2011. And wages have barely budged. Consequently, there is concern that a “brain drain” will happen again. Few new homes are being built in the county, and scarcity is another factor driving up residential prices.
“We start to get concerned about housing prices, and then a cycle comes around and prices start to drop and everyone gets comfortable that affordability is back,” Carlos Fernandez-Guzman, the co-chair of a housing solutions task force at the Greater Miami Chamber of Commerce told the Herald. “But the prices always rise again and chip away at our trained and educated workforce.”
One possible solution is that local leaders encourage the construction of residences at prices that are more affordable to the middle class.
Solving the problem of the relationship between income and the cost of housing is not easy, especially since the rise in prices is an effect of the law of supply and demand.
Miami has become a world-class city and that distinction has many advantages, but also a cost that for many residents is costly.
The issue is urgent and we must find a solution. Or at least a relief.