Palm Beach County Among World’s Least Affordable Housing Markets

It’s no secret that soaring home prices in Palm Beach County have locked most residents out of the local housing market, including well-paid professionals suce as health care workers.

The Housing Leadership Council of Palm Beach County has documented that the ratio of median home prices to median income is 7-1.

Federal guidelines say the ratio of home price to income should be no more than 3-1 to avoid being “cost-burdened.”

Now comes a new international survey of affordable housing that drives home, so to speak, just how unaffordable homes in Palm Beach County really are.

The local housing council’s survey in 2006 showed that 90 percent of Palm Beach County workers could not afford to buy the median-priced home, which was about $393,000 at the time.

Demographia’s new international survey examined 159 housing markets in the United States, the United Kingdom, Canada, Ireland, Australia and New Zealand.

Of all those countries, Palm Beach County has the 14th-least-affordable housing market in relation to local median income, the survey says.

Demographia used third-quarter 2006 housing prices and income.

With astronomical Florida mortgage costs more than most families can bear, Palm Beach County home prices - as part of the Census Bureau’s Miami-West Palm Beach Metropolitan Statistical Area - were 7.6 times the area median income.

The survey says markets with at least a 5.1-1 ratio of home prices to median income are “severely unaffordable.” With high ratings over that threshold, buyers can’t get themselves on the right end of another ratio - debt-to-income ratio - and qualify for home loans.

The least affordable markets, not surprisingly, were in California and Hawaii. Los Angeles was No. 1 on the “severely unaffordable” list with a median multiple of 11.4. San Diego was No. 2, with a median multiple of 10.5, followed by Honolulu at No. 3 with a median multiple of 10.1.

The Miami-West Palm Beach MSA had the least affordable housing in relation to median income of all metropolitan areas in Florida, according to the survey. The Southwest Florida housing market also made the list, with Sarasota coming in at No. 23 with a median multiple of 6.6.

Fort Wayne, Ind., was the most affordable housing market among all the markets surveyed, domestic and international, with a median multiple of 2. In other words, housing in Fort Wayne costs twice the median income - well below the federal guidelines established for housing costs.

But who wants to live in Fort Wayne, right?

That all may change if Florida home mortgage loan costs don’t come back down to earth. The Sunshine State is in danger of losing its economic backbone in the next decade if lower-, middle-, and perhaps even upper-middle class professionals cannot afford housing.