South Florida home prices high relative to income
THE MIAMI HERALD
BY MARTHA BRANNIGAN
Just as South Florida’s housing market is steaming ahead, new data from Zillow raise a troubling trend that has been masked by low interest rates.
According to the Seattle-based real estate information firm, as South Florida home prices have risen, median income hasn’t kept pace.
In the fourth quarter of 2012, South Florida homeowners spent 3.2 times their median annual income to buy a home. Historically, they had spent 2.5 times the local median annual income on the purchase price.
Zillow said thanks to rock-bottom interest rates, South Florida homeowners spent 28.7 percent of less of their monthly income in mortgage payments than during the pre-bubble era of 1985-1999.
“Current affordability is almost entirely dependent on low-interest rates, and there’s no doubt that rates will begin to rise in the next few years,’’ Stan Humphries, Zillow’s chief economist, said in a statement. The upshot: “Home values will have to either remain stagnant while incomes catch up or, quite possibly, home values will have to fall in some markets,’’ he added.
South Floridians have lots of company: homeowners in 24 of the top 30 metro areas studied by Zillow were paying more for homes in the fourth quarter relative to the local median income than they had back in the 1985-1999 era.
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