In the first quarter of 2016, every county in Greater Miami – Miami-Dade, Broward and Palm Beach – boasted a residential housing market more affordable than “historically normal levels,” confirmed RealtyTrac’s latest Home Affordability Index.
Derived from publicly recorded sales deed data collected by Realty Trac and average wage data from the U.S. Bureau of Labor Statistics, RealtyTrac’s affordability index compares current affordability over historical averages, with a score of 100 being normal.
As the below table shows, all three counties analyzed managed index scores above 110, and well above the market’s standard of normalcy. However, all three counties also experienced double-digit drops in affordability from Q1 2015.
| State | County | Q1 2016 Affordability Index | YoY Pct Change | Q1 Median Sales Price |
|---|---|---|---|---|
| Florida | Miami-Dade | 111 | -13% | $229,000 |
| Florida | Broward | 116 | -12% | $187,000 |
| Florida | Palm Beach | 118 | -11% | $197,500 |
| U.S. Total | 115 | -13% | $199,000 |
The decline comes as little shock, as prices in the area have been on a consistent incline in recent years, with some Miami neighborhoods experiencing monthly year-over-year price jumps as extreme as 90 percent.
| State | County | YoY Median Home Price Growth | YoY Wage Growth | Pct of Avg. Wages to Buy |
|---|---|---|---|---|
| Florida | Miami-Dade | 9% | 4% | 36.70% |
| Florida | Broward | 11% | 3% | 30.80% |
| Florida | Palm Beach | 5% | 2% | 31.60% |
| U.S. Total | 8% | 3% | 30.20% |
In the first quarter, the three-county area averaged a median sales price of $204,500 – in Miami-Dade alone the price was $229,000, after rising 9 percent year-over-year. That’s $30,000 above the national median.
While the price increases have proven a positive for sellers, on the buyer’s side, appreciation is pushing local markets even further into overvalued territory – which makes purchasing difficult when paired with the relatively low year-over-year wage growth, despite remaining in a historically affordable range.
“While the vast majority of housing markets are still affordable by their own historic standards, home prices are floating out of reach for average wage earners in a growing number of U.S. housing markets,” said Daren Blomquist, senior vice president of RealtyTrac.
In Miami-Dade, Broward and Palm Beach, residents, on average, are spending 33 percent of their wages to purchase a home, compared to only 30.2 percent nationwide.
But still, Keyes Company CEO Mike Pappas assures affordability remains in South Florida’s biggest housing market, citing low interest rates – which other Realtors have explained is a driver behind the steep price increases.
“Low interest rates are helping our affordability factor in South Florida,” he said. “Even with the strong price rise over the past few years we are still below our historic norm! The timing is good for our aging Millennials to buy now and lock in low rates.”