Single-Family Miami Homes: Most Overpriced in Nation
It’s official: Miami’s single-family homes are the most overpriced in the nation.
That’s according to Irvine, Calif.-based John Burns Real Estate Consulting.
The firm factored Florida mortgage payments, property taxes and other payments, as well as median incomes, then compared those figures to a market’s historical prices since 1980.
For residents in Miami-Dade County to be able to afford area homes, prices would have to fall 41.4 percent, or $145,000, from the current median price of $350,000.
“This is about Miami’s own history,” firm founder John Burns said. “It’s become much more expensive than any other market in the country.”
Simply put: The Miami housing market is the most “out-of-whack” in the United States, Burns said.
And considering that Miami-Dade County has little land left for development, it’s a price level for single-family homes that is expected to stick.
Miami to become more expensive
Burns said the Miami area - like Los Angeles and Orange County, Calif.; Seattle; and Portland, Ore. - is an overpriced market that will become permanently more expensive because of supply constraints.
It’s also a place where people want to live, he said. Still, the high Florida housing cost will likely serve as a deterrent, especially for companies considering relocation, Burns said.
And salaries may have to increase, he said, if businesses want to be able to retain and recruit.
“The truth of the matter is it is cheaper to have operations in Atlanta,” Burns said.
The damage is already being done in the South Florida housing market, said Jack McCabe, CEO of Deerfield Beach-based McCabe Research & Consulting. “We’re losing people now who grew up in Florida to adjacent states because of the inflation in our housing.”
Housing costs high all over
Speculative buying is squarely to blame for the high cost of living in Miami, both Burns and McCabe said.
“That’s the whole thing that drove the market,” McCabe said. “We’ve been saying it’s not just condos in Miami, it’s the single-family homes.”
Market forces in general were driven by adjustable-rate Florida mortgage loans that allowed prices to increase 50 percent with no impact to monthly mortgage payments.
Burns’ firm reported that Florida mortgage rates on those loans dropped to 3.4 percent in early 2004 from 7 percent to 3.4 percent in 1999.
As a result, 31 markets in the nation are considered overpriced, according to Burns’ research. Of that, 10 areas must suffer a drop of 30 percent or more for housing expenses to be in line with salaries.
Miami leads that group, ahead of the Riverside-San Bernardino, Calif., area, Los Angeles, Las Vegas and others. New York didn’t even crack the top 10. Burns’ study adds to a recent analysis from Miami-Dade County’s Planning and Zoning Department on the socioeconomic condition of the area.
The May study showed that, as of 2005, more than 53 percent of Miami-Dade owners paid more than 30 percent of their income on Florida mortgages. About 60.5 percent of residents who rented paid more than 30 percent of their income on housing costs.
