Millenials are approaching home-buying age, and they’re right on time. The housing market is stable, interest rates are low and studies have shown that buying is cheaper than renting.
But South Florida is nonetheless out of reach, a study by consumer finance site Nerdwallet shows.
At No. 53, the Edgewater just north of downtown Miami is the most affordable area of South Florida. Notably more affordable are dozens of Florida towns you may have never heard of, like East Milton (on the Florida panhandle); Lady Lake (an hour’s drive from Downtown Orlando); and Navarre (located on the Gulf Coast).
“The idea of buying your first home in your mid-20s or early 30s, that’s increasingly unattainable, especially in the context of South Florida,” said Ali Bustamante, economics professor with Florida International University’s Center for Labor Research Studies. “For those interested in purchasing a home here, there are a lot of sacrifices to be made.”
Bustamante said it’s likely Edgewater landed at No. 53 because of a concentration of relatively affordable but otherwise undesirable homes. Even that neighborhood is undergoing transition as developers demolish single-family homes in favor of high rises.
Nerdwallet’s study assumes a first-time homebuyer in Florida earns about $50,000 per year, the 2014 state median for households headed by residents 25 to 44 years old, and has a personal annual savings rate of 4.8 percent, based on the 10-year average measured by the United States Federal Reserve.
It then calculated how many years it would take that person to save for a 20-percent down payment, assuming his bank account is empty from the get-go.
Following the Consumer Financial Protection Bureau’s rule of thumb that homeowners should set aside no more than 30 percent of their monthly income for housing costs, the study found a first-time homebuyer in Florida could afford to spend $1,179 a month on his mortgage and other homeowner costs.
That magic number may not apply to the population of South Floridians, whose median income ranges from $42,926 in Miami-Dade and $51,608 in Broward. Rising rents make saving all the more elusive.
“The savings rate as would be imagined and is recommended are very difficult to obtain,” Bustamante said. “It takes much longer to save that 20-percent down payment that is often required.”
A study conducted by Trulia, an online real-estate company, found that it takes a college-educated person about 12 years to save for a down payment for a Miami home. For those without a college degree, it could take as long as 17 years.
Copyright © 2012-2018 Lineaire Designs, All Rights Reserved.