Home prices are going up in Greater Miami. While the first quarter of the year saw the area’s affordability at levels lower than those of Q1 2005, according to a report by RealtyTrac, a service that aggregates national housing data, median home prices continue to outpace wage growth.
In the Miami-Dade area, median home prices jumped 9 percent year over year. Meanwhile, wages only saw a small increase of 4 percent. This difference was even greater in other regions, such as Broward County. The median home price increased by 11 percent, while wages only rose by 3 percent.
RealtyTrac’s index looked at 456 counties across the country. It measures affordability based on the percentage of average wages needed to make monthly house payments on a median-priced home with a 30-year fixed rate mortgage and a 3 percent down payment, which represents a national average for first-time homebuyers, including property taxes, home insurance and mortgage insurance.
Miami-Dade and Broward earned scores of 111 and 116, respectively. This puts them above the index’s baseline of 100 (scores below 100 show decreased affordability). But they are still pretty close to the unaffordability border. If prices continue to rise faster than wages, local residents might have to postpone their dreams of owning a home.
“While the vast majority of housing markets are still affordable by their own historic standards, home prices are floating out of reach for average wage earners in a growing number of U.S. housing markets,” Daren Blomquist, senior vice president at RealtyTrac, said in a statement.
The rising property values have already slowed down the pace of home sales in the region. This slower sales pace could lead to a large buildup of inventory. And, in turn, it could drag down the market even further. But there’s still a silver lining to his housing cloud.
What does it mean for Greater Miami homeowners?
For Greater Miami homeowners, this might just be the right time to look towards a cash-out refinance, and turn some of that home equity into cash. The extra money could come in handy to those looking to pay off high-interest credit card debt or just to make some home improvements and increase the value of their home even further.