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Anyone looking to move to South Florida could be in for a sticker shock as it becomes one of the most unaffordable places to buy a home in the United States.
The average new mortgage burden for a home in the neighborhood has almost doubled in the past year making the average monthly payment $2,452 — up 96.5 percent from last year.
Mortgage rates have risen across the board amid record inflation, with the average 30-year fixed mortgage rate for the week ending Oct. 21 rising to 7.16 percent.
But in South Florida, the gap has widened even further after the area saw massive population growth during the height of the COVID pandemic.
“South Florida has long been one of the most unaffordable markets in the country,” said Nicole Bachaud, senior economist for real estate site Zillow.
‘It puts a lot of pressure on the household budget when it comes to buying and paying off a new mortgage.’
Average mortgage payments in South Florida have nearly doubled in the past year after rising 96.5 percent
The average contract rate on a 30-year mortgage rose to 7.16% for the week ended October 21, up from 6.94% the week before
Inflation rates continue their upward trend in 2022
Florida is now seeing the third highest increase in the country for monthly mortgage payments, experts at real estate site Zillow determined.
They used a neighborhood’s typical home value, assumed a home buyer would make a typical 20 percent down payment with a 30-year fixed mortgage, and used the Freddie Mac Primary Mortgage Market Survey to find interest rates in 100 cities across the country. determine.
The experts found that the majority of the cities with the largest increases in mortgage rates were in the Sunshine State.
Fort Myers, for example, saw a 102.5 percent increase in monthly mortgage payments from last September — despite being devastated during Hurricane Ian.
Meanwhile, prices in Tampa rose 93.9 percent from last year and in Jacksonville — in the northern part of the state — prices rose 92.7 percent.
“Overall, Florida has seen some of the biggest increases in home values in the past three years, especially in the past year,” Bachaud told the Sun-Sentinel.
She added: “It has worsened more in those markets that have also seen the highest increases in home values.”
And in South Florida, demand for homes skyrocketed during the pandemic as mandate-weary Northerners moved south.
During that time, mortgage rates across the country jumped from a record low of 2.7 percent to now over 7 percent.
As a result, fewer people are now willing to buy a home as they struggle with historic interest rates.
At the same time, Bachaud said, fewer homes may enter the market as potential sellers decide to hold on to the homes they have at their current interest rate rather than move to a new home at a higher interest rate.
And the situation isn’t likely to improve anytime soon, Bachaud said, as the average interest rate on long-term US home loans has hit its highest level since 2001.
NAR economist Nadia Evangelou noted that the combination of high inflationhigh interest rates and slow wage growth mean that “the cost of buying a home exceeds 30 percent of an average family’s income.”
“As inflation outpaces wage growth, the average family must stretch its budget and spend more than 25 percent of its income on paying its mortgage,” she said.
Looking at rental data from more than a million active listings across the country, real estate tracker Zumper’s report showed that cities have seen massive year-over-year rent increases since the downturn during the pandemic.
The housing sector is most directly affected by increases in the Fed’s key rate, which rose from nearly zero in January to a maximum of 3.25 percent.
The Fed is trying to curb inflation by cooling the economy with interest rate hikes, which increase the cost of loans for businesses and households and slow spending.
However, inflation remains stubbornly high at 8.2 percent, and so-called core inflation, which excludes volatile food and energy prices, reached a 40-year high of 6.6 percent in September.
The Fed is expected to issue another unusually large 75 basis point rate hike, its fourth in a row, at the end of its next policy meeting on November 1-2.
New York is still the least affordable place to live in the US according to a new, comprehensive real estate report, with Washington, DC, Miami, and several California cities rounding out the top ten — not to mention surprising contender Boston.
The National Association of Realtors’ revealed Friday that the home affordability index — a measure that uses median existing home prices, median household income and average mortgage interest rates to calculate a home’s affordability — fell to 102 last July. .2, the lowest since 2006.
Looking at rental data from more than a million active listings across the country, real estate tracker Zumper’s report showed that cities have seen massive year-over-year rent increases since the downturn during the pandemic.
Unsurprisingly, the Big Apple led the way for the most unaffordable, with an astronomical average rent of $3,860 for a one-bedroom property.
To round out the top ten, there were some more of the usual suspects, such as tech and startup haven San Francisco, near San Jose, and recently soaring Miami — with six of California’s cities.
However, somewhat upset, Boston jumped over San Francisco to take the second spot, up 5.9 percent this month alone to an average rent of $3,060.
That’s nearly $1,000 — or 50 percent — more than last year, when the City on the Hill posted an average rent of $2,150 and $400 as of July.