Miami Experiencing the Same Rental Downtrend As Other Major Cities
Due to extremely low vacancy rates i.e. 2.2% and some of the worst rental affordability stats in the country, Miami tops the list of the worst cities for renters. 14th most out the 46 major markets we evaluated, the average Miami rent isn't so high at $1,386 but relatively low wages in the city means that rent eats up 36% of the median Miami income which is the third-highest share among major U.S. cities. Meanwhile, the eighth most rapid increase in the nation was that the low vacancy rate pushed rents up 6.6% last year. As a number of luxury towers currently under construction come online, local experts anticipate price relief at the high end. As jobs and wages have been growing, they expect that relief to be temporary though, especially in the popular downtown section of the city, meaning the new units will ultimately be absorbed. Miami, one of the most expensive cities for renters, where on average rents, consume 43 percent of the typical household income, up from a historical average of just over a quarter.
Since luxury buildings tend to be more profitable, builders have focused on construction at the high end of the market. Only 10.7% of multifamily construction in Miami was targeted at the lower third of the market between 2014 and 2016. According to an analysis by Zillow last year, that’s compared to 69.4% at the high end. For the average, that luxury supply won’t do much. Among low-end apartments, rents are growing fastest. Rents have mounted 12.7% overall and 19.3% in Miami since home values bottomed in December 2011, according to Zillow. Rent and utilities are supposed to take up no more than 30 percent of a household’s income if they are considered to be affordable. But as a tightening market pushes up rents ever faster, outrunning modest rises in pay, that goal is increasingly unattainable for middle-income families. And many are discovering that living on their own is proving unaffordable, forcing them to live with a roommate as rents head higher in the tightest markets.
High rents choke spending on other goods and services for many middle- and lower-income people, impeding the economic recovery. According to a new report by the National Low Income Housing Coalition, low-income families spend about a third less on food, 50 percent less on clothing, and 80 percent less on medical care that spends more than half their income on housing compared with low-income families with affordable rents. And renters as compared to homeowners amass less wealth, even non-housing wealth. The problem before getting better threatens to get worse. Creating a wave of supply that is beginning to crest, apartment builders have raced to build more units. According to the CoStar Group, a real estate research firm, Miami added 2,500 rental apartments last year, and 7,500 more are expected in the next two years. Buying a home is considerably cheaper than renting in many markets and Miami is no exception. But since many people’s income is too low, they are shut out of buying, they are burdened by other debt or they don’t qualify for a mortgage.
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