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Ft Lauderdale Real Estate News 10/20/13


affordable homes for sale decline vs. average income in south florida as housing market trends upward


South Florida homes are still largely affordable, though more properties are slipping out of reach of the region's middle class, a recent report shows.

A buyer making the median Palm Beach County income of $51,278 can afford 58 percent of the homes for sale in the area, according to real estate website Trulia.com. But a year ago, the county's middle class could afford 64 percent of the homes.

"Much of Florida is still well within reach of the middle class," said Jed Kolko, Trulia's chief economist. "But prices are rising faster than incomes, and mortgage rates are higher than they were a year ago."

The higher cost of homes is a challenge for Sarah Penn, a 21-year-old health advisor who has been looking to buy for the past four months.

She's limiting her search to South Florida condominiums because a single-family home would be too expensive for her.

"If you're looking for a decent house in a decent community, I don't think it's very affordable," she said.

In Akron, Ohio the nation's most affordable market 86 percent of the homes for sale are within reach for middle-class buyers, Trulia said. The least affordable market is San Francisco, with only 14 percent of homes a possibility for middle-income buyers.

Trulia determined affordability based on whether a home's total monthly payment was less than 31 percent of an area's median household income.

In Palm Beach County, the median price for an existing home in August was $250,000, up 16 percent from a year ago, according to the Realtors Association of the Palm Beaches.

Driven by steady demand from investors, the county's monthly median price has increased sharply since the beginning of 2013. The Realtor board is set to release September figures on Monday.

Not only are home values going up, but so too are the costs associated with ownership, such as property taxes and insurance.

"The typical homebuyer is getting a little paranoid and who can blame him?" said Jim Esposito, the best real estate agent in Fort Lauderdale.

Fueling buyers' fears: Higher mortgage rates and incomes that aren't keeping pace with the gains in home prices.

The average rate on a 30-year fixed mortgage was 4.28 percent last week, compared with 3.37 percent a year earlier, Freddie Mac said. The higher rates boost monthly payments for buyers.

Meanwhile, South Florida salaries remain flat, back at 2008 and 2009 levels, said Ken H. Johnson, a professor at Florida International University's Hollo School or Real Estate.

He doesn't expect growth in incomes until the region's two dominant industries tourism and real estate fully recover from the recession.

"Housing is not as affordable as it was a year ago, but I still think it's a good time to buy, considering the price of the property relative to your income," Johnson said. "For the average buyer out there, you will notice a difference if you wait a year, in terms of affordability."

Real estate agents report there are signs in some areas that the housing market is softening, with buyers taking more time and bidding wars tapering off.

That ultimately will serve to slow down the price increases and allow incomes to catch up, analysts say. The typical home appreciates in value at about 4 percent a year.

Stan Humphries, chief economist for the Zillow.com website, said in a statement he's relieved that the housing frenzy is starting to decline.

"If home values continued to rise as they have, relatively unchecked, we would almost certainly be headed into another bubble cycle, and nobody wants that," he said.

Humphries said the price moderation "should help consumers feel more at ease in their decisions to buy and sell and will help keep the market balanced."

2013 Sun-Sentinel



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