Miami is one of the worst places for first-time home buyers according to the Demographia International Housing Affordability Survey. That will be obvious if you find yourself currently shopping for a nice and affordable home in the current market.
The Miami Herald has come up with a new tool to help people find out which neighborhoods are more affordable and have homes in that sweet spot - between $250,000 and $400, 000. The Miami Herald's Nick Nehamas talks about where in south Florida a person can still buy a home that's relatively affordable:
WLRN: Nick, every time we talk about real estate in Miami, I'm hoping to hear some good news.
You know, I've got to be honest.This is not one of those clouds that has that silver lining that we're all dreaming of. Foreign investment has created a lot of jobs for people here, but it really has also driven housing prices way out of line with what most people can afford.
Within the [Miami Herald] series you have a tool for people where they can actually punch in a ZIP code and see what's available. My understanding is that homes priced between $300,000 and $600,000 make up a little over 40 percent of sales in Miami Dade and yet the median income is below $50,000. Doing the math, how in the world are people affording houses?
It's really tough. And I've heard from top realtors who sell multimillion-dollar condos on the beach and big mansions in Coral Gables. They say that if they get a listing under $300,000 they take it because it's free money; that house will be sold in weeks if not days. That's how tight the market is out there especially in that sweet spot, [homes] between 2, 3, and 5 and $600,000.
When you talk to real estate agents and brokers, what are they saying about who's coming in and buying? Is it still the foreign money? Is it people retiring here? What's happening to the middle class? What's happening to these young professionals?
Foreign money has definitely slowed down over the last couple of years compared to what it was when the dollar was really weak, and for middle class people brokers say there are homes out there that are affordable. It just takes a lot of work. I mean, you hear about people looking at 30, 40, 50, 60 homes before they find one that's suitable and then once they close it often involves thousands, tens of thousands of dollars in renovations and making sure the home is up to code.
Right now you say that there are [affordable] homes out there. Where?
There are these hidden gem neighborhoods that are closer to downtown and other employment centers that we've identified on MiamiHerald.com. But, sadly, the further south you go and the further away from job centers you go that's where the affordable product is. You see, a lot of people are really starting to consider Homestead and the Cutler Bay Area, even knowing that the traffic is going to be a nightmare, just because that's where they can get the home they've always dreamed of.
What about the condo market? What does that look like right now in Miami?
The luxury condo market is really falling off with sales and prices dropping 20, 25 percent in the biggest luxury markets. Brokers are saying that sellers are really just going to have to reduce their pricing. But it is a tale of two markets because the single family market, the market for middle class buyers, there's not a lot of new construction being delivered. So that market is just going to keep rising and rising and rising.
What about city leaders, county leaders and developers? Do they ever think about affordable housing?
You see developers going about it, realizing that there's a market here for building smaller homes and affordable apartments. You see the county certainly trying to encourage this growth, although one proposal that would have forced developers to build affordable units in their new projects failed at the county level. It's now been refashioned as a voluntary ordinance and you see state governments coming about this in different ways. On the Beach the mayor and the City Council have passed a minimum wage that's higher than the state level. That's immediately led to lawsuits from business interests in the states. But housing is such a complex problem. You know it involves education, it involves jobs, it involves infrastructure and so I think it's really difficult for the public and private sectors to work together in a comprehensive way.
We've talked about the brain drain issue before, how young professionals are leaving because it's just cheaper to live in other places.
You hear a lot of people saying they want to stay in Miami, they have family here, they like the lifestyle, but they can't get the home they want and so they end up in Tampa or Orlando. Atlanta has become very, very popular for its cost of living. And so I think that brain drain issue, which we seem to have had whipped during the recession when prices were so cheap and we saw millennials crowding into downtown, that's coming back and that is certainly alarming for business leaders. They're very worried about their ability to bring people in from cheaper parts of the state and the country. When business leaders get upset that's when you see political action.
In one of your stories you talk about Key West. It's not a fair comparison, but at the same time there you have a situation where values have gone up so much that you really are forcing out the service industry worker, teachers, police officers, etc... Miami, should they worry about becoming something like that?
It's starting to get to that point. A lot of service industry workers and even police officers and firefighters live in South Dade and have long commutes to Key West. Also on the island you have the issue that they can't build as many new units as they need because of their hurricane evacuation plans. In Miami you are seeing people live an hour and a half, two hours away from their work. And if there's no new housing built for those people they're going to keep getting pushed further and further away from the jobs and so we could see the Florida Keys type situation here.
This special series that you have at the Miami Herald. Why did you guys want to put this together? What was the main reason?
What made us want to do this project is we really started hearing a lot of concern from the business community that they were not going to be able to retain and attract the kind of workers they need to diversify Miami's economy and make this a good place to work. So that was what was new after three years of price increases. Business owners are really starting to shake their heads and worry.