Buying a three-bedroom home in Broward County requires 35 percent of the county’s $50,755 median household income, compared with 43 percent for renting the same-size property, according to RealtyTrac, a research business in Irvine, Calif.
The gap is not as wide in Palm Beach County. Consumers need to spend just less than 37 percent of the county’s $52,595 median household income to buy and just more than 37 percent to rent.
In 2012, when home prices bottomed after the six-year downturn, buyers in both counties devoted only about a quarter of their incomes to housing, while renting took up roughly 40 percent of their budgets, RealtyTrac said.
“Home prices are rising at a faster pace than incomes,” said Daren Blomquist, a vice president of RealtyTrac. “The trajectory now is that buying is becoming less affordable, faster.”
While South Florida’s rental market also has become increasingly pricey in recent years, rents aren’t climbing as quickly as home values, RealtyTrac said.
Whether they rent or buy, many consumers are spending more than the traditional norm for a roof over their heads. Industry analysts and counselors say buyers and renters should spend no more than 28 percent to 30 percent of their incomes on housing.
“Household budgets continue to get squeezed by rising housing costs in an environment of largely stagnant incomes,” said Greg McBride, a senior financial analyst with consumer website Bankrate.com in North Palm Beach.
McBride expects wages to start inching up over the next year. Still, he and other analysts say young professionals increasingly will turn to roommates to deal with the housing-cost burden. They also may decide to live with parents on a long-term basis.
Jack McCabe, an analyst in Deerfield Beach, said renting still is the better option for many people because of maintenance and other regular expenses associated with home ownership. But even renters are struggling to find affordable options as builders focus on delivering luxury properties.
“A lot of people just feel like the middleman,” McCabe said. “They get a paycheck, they divvy it up each month and it goes back out to their debtors.”
For its report, RealtyTrac analyzed counties in the United States with a population of 100,000 or more. Mortgage payment amounts include principal, interest, taxes and insurance and assume a 10 percent down payment on a 30-year, fixed-rate loan with an average interest rate from Freddie Mac.
The company said it determined rent affordability by dividing the annual fair market rent for a three-bedroom home in each county by the estimated median household income for that county. To calculate buying affordability, RealtyTrac divided the annual house payment for an average-priced, three-bedroom home by the estimated median household income.
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It’s still more affordable to buy a home than rent one in South Florida, though higher prices in recent years make buying less of a deal, a new report shows.
July 9, 2015 6:14am