Miami's housing affordability crisis poses a dire threat to its future
Miami-Dade's housing affordability crisis is so dire, it now poses as much of a threat to the region as sea level rise, according to a recent market update prepared by Florida International University's Jorge M. Perez Metropolitan Center.
The study shows that over half of Miami-Dade's cost-burdened renters (households spending more than 30% of their income on rent) are "severely" cost-burdened, meaning they spend more than 50% of their income on rent. For more than 55% of them (142,466), the condition qualifies as "severe."
Even worse, the number of severely cost-burdened renter households in Miami-Dade has increased by 13% (16,203 households) since 2012.
"We're seeing a surge of households in this category," said Ned Murray, associate director of the Metropolitan Center. "Once you hit that level of severe cost burden, staying in Miami becomes prohibitive and people start to leave. This is a major challenge, like sea level rise, that impacts the economy, education and quality of life in Miami. We need to take it on as a primary policy issue."
The report is part of the data Murray has been collating since January for two upcoming reports critical to the area's future: The City of Miami Affordable Housing Master Plan, which is completed and scheduled to be workshopped by city commissioners on Oct. 24; and the Miami-Dade County Affordable Housing Blueprint, which is scheduled for completion in December.
Both reports are designed to provide pathways and ideas for local and county governments to address the growing dearth of affordable housing (i.e., rents lower than 30% of a household's annual income).
"The major thrust of the City of Miami Master Plan is building the local funding and investment support that we don't have today," Murray said. "We have to figure out how to do this locally, because we can't rely on federal funding anymore, which has steadily shrunk over the years."
For example: The annual budget for the U.S. Department of Housing and Urban Development, the government arm responsible for providing and overseeing affordable housing, has been whittled down from 83 billion in equivalent dollars in 1978 to 44 billion in equivalent dollars today, Murray said.
The problem extends beyond low- and moderate-income households earning less than 80% ($25,991) of the area median income of renters in Miami-Dade of $32,489, according to Census data. Murray said the affordability issue is also impacting households that earn from 120%-150% of the renter median income as well ($38,986-$48,733).
Part of the reason behind the crisis: Miami has become a victim of its own success. According to the Miami Association of Realtors, the median sales price for a single-family home has ballooned nearly 87% since 2012, from $188,000 to the current $351,250.
Although the median income for homeowners in Miami-Dade is substantially higher than renters — $64,606 — home prices are still unaffordable to 82% of Miami-Dade's 701,875 households.
That has created growing demand for rentals: From 2007 to 2017, according to the study, Miami-Dade lost 56,584 owner households and gained 95,880 renter households.
At the same time, market appreciation — driven in large part by interest from foreign buyers — priced more than 17,000 units out of reach for 80%-120% AMI households over the five-year period of 2013-2017.
In other words: More people competing for rentals that keep soaring in price.
"What makes the crisis even more troubling is that it's not likely to change," Murray said. "The Miami-Dade County economy is not expected to improve radically within the next 5-10 years. According to the Florida Department of Economic Opportunity projects that most of the occupations that will gain the most new jobs from 2018-2026 will have median average wages of less than $15 per hour."
The report concludes that if wage levels in Miami-Dade increase as they have over the last five years, and the number of units affordable to households earning 80% of AMI continue to disappear at the current rate of 6,000 per year, the county will need to find, preserve or develop over 11,000 affordable units per year over the next decade just to maintain the current percentage of affordable housing units.