Thursday, May 8, 2008

Housing Woes

As Brian at Incertus has been telling us, no one can afford to live in South Florida.

South Florida’s housing boom has been a disaster for many middle-income residents, pushing home prices and rents in Miami-Dade County far beyond most families’ ability to pay, according to a study released Tuesday.

The study, conducted by Florida International University’s Metropolitan Center, found that even after recent price drops, the ”single-family home price of $306,100 remains unaffordable to approximately 85 percent of Miami-Dade County’s households. Further, the current average rent price of $1,354 far exceeds the affordability level of most households.”

[…]

While skyrocketing prices were the most obvious consequence of the boom, the study notes several other trends that made things worse:

• Developers focused on building expensive luxury homes and condos that most people can’t afford.

• Developers converted thousands of apartments into condominiums, reducing the supply of available rentals.

• Developers stopped building apartments almost entirely.

Among the effects of all this:

• Nearly half of all homeowners and more than 60 percent of renters are ”cost-burdened,” meaning they spend more than 30 percent of their income on housing.

• One in three renters — or more than 110,000 Miami-Dade households — are ”severely cost-burdened,” meaning that they spend more than half their monthly income on housing.

• Home foreclosures are soaring as investors and many families find themselves over their heads in debt.

The only question I have is that if no one can afford a house, how come the traffic here in Miami is still so awful? Where do all these people come from?

I’m being snarky, but it is interesting that all these people who invested in speculative real estate here in Miami a few years ago and built all these high-rise condo towers — many still under construction in the neighborhood around my office — got caught flat-footed when the bubble burst. Especially when people who know very little about the intricacies of the business — like me — had the feeling it wouldn’t last and opted to stay out of it. (I have my own housing issues, but that’s another matter that I’ll cover in a post when it’s resolved.) As it is, Miami-Dade County is taking on the aspects of other places that I’ve lived, such as Santa Fe, New Mexico, and Harbor Springs, Michigan: it’s too expensive for most people, but the properties are so deep in hock that they can’t even rent them out and still make the payments. That’s one geography lesson the real estate bust is teaching these folks: they now know what creek they’re up.