Miami Real Estate Prices Revert Toward Norm Relative to Incomes, But Affordability Still Ranks Relatively Low

posted on February 7th, 2010 filed under: Real Estate News

One measure of housing affordability compares median home prices to median incomes.  The National Association of Home Builders maintains a Housing Opportunity Index that tracks those data.

In 1998, before the greatest real-estate mania in American history, Miami was already among the less affordable real-estate markets in the United States:

  • 1Q98 median home price:  $106,000
  • 1Q98 median income:  $39,200
  • 1Q98 affordability ratio:  2.70
  • 1Q98 U.S. metro affordability ranking:  154 of 191 (80th percentile)

By the end of the boom, the relationship between incomes and home prices in Miami had become grotesquely distorted:

  • 1Q08 median home price:  $300,000
  • 1Q08 median income:  $49,200
  • 1Q08 affordability ratio:  6.10
  • 1Q08 U.S. metro affordability ranking:  217 of 223 (97th percentile)

Now, in the wake of the bust, the relationship between home prices and incomes in Miami has almost returned to the pre-boom level, and Miami has backed off its thrust toward the top of the unaffordability chart.  But because real estate has gotten so cheap nationwide, Miami’s relative affordability ranking remains significantly higher than before the boom.

  • 3Q09 median home price:  $160,000
  • 3Q09 median income:  $50,800
  • 3Q09 affordability ratio:  3.15
  • 3Q09 U.S. metro affordability ranking:  154 of 191 (80th percentile)

Incidentally, New York remains the least affordable metro area, with a median home price 6.5 times the median income.  Some dreams die hard.

Rankings based on the Housing Opportunity Index maintained by the National Association of Home Builders and Wells Fargo.

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posted by // This entry was posted on Sunday, February 7th, 2010 at 11:19 am and is filed under Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed.

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