Homes in Palm Beach, Broward and Miami-Dade counties are just “not affordable,” according to a report released by mortgage giant Freddie Mac yesterday that ranked South Florida low on its affordability index.
Any place that scores lower than 100 on Freddie Mac’s index is considered unaffordable. South Florida earned a 72. But what does that score really mean?
Let’s put it into real estate terms.
Housing should cost families only 28 percent of their monthly income, according to traditional standards. The reality is, South Florida families are paying more than that, the Palm Beach Post reported.
A family that put 10 percent down on their home, landed a mortgage rate of 4.29 percent and paid tax and insurance equal to 2.8 percent of the home’s value would pay nearly $1,600 a month in principal, the Post reported. That’s several hundred dollars more than 28 percent of the median price for South Florida homes at $255,000, or $1,150 per month.
“If (interest) rates continue their upward trend, it will be difficult for many families to purchase a home without seeing some income growth,” Freddie Mac’s chief economist, Frank Nothaft, told the Post. “Rising home prices and interest rates along with little to no income growth has resulted in a substantial erosion of homebuyer affordability over the past year.” [Palm Beach Post] — Angela Hunt