Housing costs in South Florida have become increasingly unaffordable in recent years. As foreign developers scramble to buy up and develop properties throughout the region, South Floridians are using greater and greater chunks of their monthly income for rent and mortgage payments.
But a recent study by Florida International University and Florida Atlantic University suggests South Floridians may finally be getting some relief. According to the universities' quarterly housing affordability index, which measures the percentage of income used towards housing payments and compares property prices to the average annual income, housing costs got a bit more affordable in Broward and Palm Beach counties in the first quarter of 2019.
During the first quarter of 2019, Broward residents spent 21.3 percent of their monthly income on their mortgage payments. That's a 1.9 percent decrease from the last quarter of 2018. The county's property price to annual income ratio is also down from 4.57 to 4.40.
Average mortgage payments and average property prices both decreased in Palm Beach County as well. From 2018 to 2019, the monthly cost of housing dropped from 18.6 percent of monthly income to 17.1 percent. The property price to annual income ratio decreased from 3.67 to 3.53.
"Declining mortgage rates have really helped here in terms of the monthly cost of homeownership," Director of the Hollo School of Real Estate Eli Beracha said in a statement.
But in the long-run, Beracha says, property prices can increase as a result of declining mortgage rates as new buyers enter the market.
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The study may offer little comfort to South Floridians who are increasingly strapped for cash at the end of the month. Although housing in Broward and Palm Beach Counties is marginally more affordable this year, housing payment and price ratios are still higher than the long-term average affordability scores calculated by the index, indicating higher costs of homeownership for residents in both counties.
Housing costs are still not as expensive as they were during peaks in 2006 and 2007 before the Great Recession hit. Researchers hope the latest numbers are not a fluke, but an indication of a growing trend.
“With a looming peak in the tri-county housing cycle, the resulting downward pressure on the demand for homeownership should work to moderate property prices and assist in housing affordability in [Miami-Dade, Broward, and Palm Beach] counties,” said Ken Johnson, associate dean and professor at FAU.
Despite the slight decrease, rapid development in the counties' major cities and the looming threat of climate change will likely result in unpredictable disruptions in the South Florida housing market. It remains to be seen whether South Floridians will get some long-lasting relief from burdensome housing costs.