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Homebuyers in Miami now must spend nearly 86 percent of their income to afford the $600,000 median sales price, on a home in the city according to research released Monday by RealtyHop.
That makes the Magic City the least affordable city in the nation after a meteoric rise in home prices over the past two years sent it skyrocketing past pricy markets like Los Angeles and New York.
Miami became the least affordable place to buy a home in February, when it surpassed New York in the monthly report from RealtyHop. It has stayed in that position every month since.
The report mirrors others that have found Miami is now one of the least affordable cities to rent or buy a home and continued affirming that home ownership is becoming unaffordable nationwide.
“Of the 100 most populous cities, 83 have a homeownership burden of 28 percent or higher,” the report said. “In other words, average families in these cities will have to spend 28 percent or more of their annual income on owning costs.”
Housing is considered affordable if owners or renters don’t spend more than 30 percent of their gross monthly income on it. But after the run-up of home prices during the pandemic housing market and ensuing spike in rents, some markets have people spending the vast majority of their incomes. And nowhere is worse than Miami.
Home prices may have peaked in the spring in Miami, with the median price rising to $625,000 in May before dropping to $600,000 this month, according to RealtyHop.
But the report shows the impact of rising mortgage rates on the market.
The estimated monthly payment for a buyer who puts 20 percent down and secures a mortgage with a 5.5 percent interest rate is now $3,193. While the median home price was lower than the peak in May, buyers are spending about $170 more per month.
Homeowners can expect to spend more in other cities, including San Francisco, where buyers spend over $6,800 per month for mortgage and taxes, according to RealtyHop. But with a median household income of more than $126,000, homeowners in San Francisco are spending 64.74 percent of their income each month.
Los Angeles and New York followed Miami as the second and third least affordable cities, according to the report. Homeowners in those cities spend 84.81 percent and 84.61 percent of their income on monthly payments related to homeownership.
At about $45,000, Miami’s household income has people spending 86 percent of their income toward the median mortgage plus taxes, the report said.
It shows that the market is squeezing Miami residents in all directions.
According to a June rent report from rental marketplace Zumper, Miami now has the fifth-highest rent. A two-bedroom home in Miami now costs $3,290 a month, up 26 percent from a year before.
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