Foreign Buys Drive Hopeful Homeowners To Spend More On Rent
Foreign investors have been gobbling up properties all over South Florida, often paying with cash. And banks are less willing to take a risk with families who need financing in lieu of cash.
This affects the percentage of income South Floridians spend on housing, because when it's harder to purchase a house, more people rent. And when more people are renting, rent prices go up.
For six years now, home-seeker Lionel Lightbourne has been looking for a home with his wife and the seven kids they have between them, aged 15 to 28.
“I want enough space so that they can come over, eat a Thanksgiving meal and when they get stuffed, can go into a room and lie down. If all of them want to go lie down at the same time with the grandchildren they’ll be able to do that,” Lightbourne says.
He says they need at least three bedrooms for that -- not a terribly tall order. He has had more than 20 approvals for financing, but all of them expired before his family could find a suitable house.
At this point, Lightbourne says, he has turned the time he and his wife spend house hunting into dates.
“We go out and look at homes. [We] have something to eat or buy some finger food and a few sodas to just drive around looking for houses that we may own in the future,” he says.
In a North Miami neighborhood called Skylake, Lightbourne’s realtor Hedy Fana points to house -- a light blue, three bedroom-two bath with a big front window. Lightbourne was interested in it, but in a matter of a day, it was already off the market.
“Inventory’s very tight,” Fana lamented, adding that she and Lightbourne have visited countless properties, “too many to remember.”
Like many hopeful homeowners, Lightbourne is renting instead. FIU Institute for Social and Economic Policy's Ali Bustamante says this is happening all over South Florida.
“This greater demand for rent is driving up the rent prices,” he adds.
The U.S. Department of Housing and Urban Development recommends no more than 30 percent of your income go to housing costs. Bustamante says that’s not what’s happening here.
“More often than not, when I come across most people, whether they’re lower- or middle-class people," he says, "they tend to be spending well upward of 70 percent of their income.”
Additionally, renters tend to spend a larger percentage of their income on housing than homeowners.
Arielle Vicaria is an artist who is currently freelancing in Miami. She is looking for a new apartment in the Biscayne Corridor and although she could manage the rent in a modest apartment, the initial payment of first, last and deposit is a challenge.
“That's a big chunk of money,” Vicaria said, comparing rates here to Sarasota, where she last lived. “I rented a two-bedroom duplex. It was $700 and we had a garage, we had a backyard, we had a beautiful kitchen. It was spacious and it was in a nice neighborhood. In Miami you’re not going to find anything like that.”
Another challenge for people looking to live in Miami is that increasing rents and housing prices don’t just push people out of neighborhoods -- it's a matter of being priced out of South Florida altogether.
“We see that as long as you're not on the bay if you're [on] inland property, values tend to be relatively similar irrespective of where you are,” Bustamante says, adding that pricewise “living in Kendall isn't remarkably different than living in South Miami.”
Even though prices are rising, Lionel Lightbourne can still afford to buy a house in the inland neighborhoods where he's been looking.
The problem is, he doesn't have the cash outright or the time to drop everything and tour houses as soon as they go on the market.
Housing experts say they hope this doesn’t signal another housing bubble, especially because the rest of the country could follow. Florida is typically a bellwether for housing markets across the country.
“It’s amazing how you think one piece of property ... affects the whole aspiration of families and generations to come,” Lightbourne says hopefully.