Anyone looking to move to South Florida may be in for a surprise as it becomes one of the least affordable places to buy a home in the United States.
The average new mortgage payment for a home in the area almost doubled in the last year bringing the median monthly payment to $2,452, an increase of 96.5 percent from last year.
Mortgage rates have been rising across the board amid record inflation, with the average 30-year fixed mortgage rate jumping to 7.16 percent for the week ending Oct. 21.
But in South Florida, the difference has become even more pronounced after the area experienced a population boom during the height of the COVID pandemic.
“South Florida has already been one of the most unaffordable markets in the country for a long time,” said Nicole Bachaud, chief economist at real estate site Zillow.
“It’s putting significant pressure on family budgets when it comes to buying and paying off a new mortgage.”
Average mortgage payments in South Florida have nearly doubled in the last year after increasing by 96.5 percent
The average contract rate on a 30-year fixed-rate mortgage increased to 7.16% during the week ending October 21, up from 6.94% the previous week.
Inflation rates continued their upward trend throughout 2022
Florida is now experiencing the third-highest increase in the country for monthly mortgage payments, experts at real estate site Zillow have determined.
They used a typical neighborhood home value, assumed a homebuyer would make a typical 20 percent down payment on a 30-year fixed mortgage, and used the Freddie Mac Primary Mortgage Market Survey to determine interest rates. in 100 cities across the country.
The experts found that most of the cities that had the biggest increases in mortgage rates were in the Sunshine State.
Fort Myers, for example, saw a 102.5 percent increase in monthly mortgage payments since last September, despite being destroyed during Hurricane Ian.
Meanwhile, in Tampa, prices are up 93.9 percent from a year ago and in Jacksonville, in the northern part of the state, prices are up 92.7 percent.
“Overall, Florida has seen some of the biggest increases in terms of home values in the last three years, especially in the last year,” Bachaud told the Sun-Sentinel.
He added: “It is most exacerbated in those markets that have also seen the largest increases in home values.”
And in South Florida, housing demand soared during the pandemic as Northerners, weary of the mandate, moved south.
During that time, mortgage rates across the country jumped from a record low of 2.7 percent to more than 7 percent.
As a result, fewer people are now willing to buy homes while facing record interest rates.
At the same time, Bachaud said, fewer homes may be put on the market as potential sellers decide to keep the homes they have at their current interest rate rather than move to a new home at a higher interest rate. .
And the situation is not likely to improve anytime soon, Bachaud said, as the average interest rate on long-term home loans in the United States hit its highest level since 2001.
NRA economist Nadia Evangelou pointed out that the combination of high inflationhigh interest rates and slow wage growth mean that ‘home purchase costs exceed 30 percent of a typical family’s income’.
“While inflation outpaces wage growth, the typical family needs to stretch their budget and spend more than 25 percent of their income on mortgage payments,” he said.
Looking at rental data from more than a million active listings across the country, the report from real estate tracker Zumper showed that cities have seen massive rent increases year over year since they plunged during the pandemic.
The housing sector is among the most directly affected by increases in the Fed’s policy rate, which went from near zero in January to a maximum range of 3.25 percent.
The Fed is trying to control inflation by cooling the economy with rate hikes, which raise the cost of borrowing for businesses and households and slow spending.
However, inflation remains stubbornly high at 8.2 percent, with so-called core inflation, which excludes volatile food and energy prices, hitting a 40-year high of 6.6 percent in September.
The Fed is expected to issue another unusually large 75 basis point rate hike, the fourth in a row, at the end of its upcoming policy meeting on November 1-2.
New York remains the least affordable place to live in the US according to a comprehensive new real estate report, with Washington, DC, Miami and several California cities rounding out the top ten, not to mention surprise contender Boston.
The National Association of Realtors revealed Friday that its Home Affordability Index, a metric that uses median prices of existing homes, median household income and median mortgage rates to calculate home affordability, fell to 102. .2 last July, the lowest recorded since 2006.
Looking at rental data from more than a million active listings across the country, the report from real estate tracker Zumper showed that cities have seen massive rent increases year over year since they plunged during the pandemic.
Leading the way for the most unaffordable was, unsurprisingly, the Big Apple, with an astronomical median rent of $3,860 for a one-bedroom apartment.
Rounding out the top ten were some of the usual suspects, such as startup and tech haven San Francisco, nearby San Jose, and the recent rise of Miami, with six of the cities located in California.
In something of a surprise, though, Boston overtook San Francisco to take second place, up 5.9 percent this month alone to a median rent of $3,060.
That represents an increase of nearly $1,000, or 50 percent, from last year, when City on the Hill posted median rent of $2,150 and $400 since July.
