South Florida Among Costliest to Rent
Since the recession, the shift to rentals has increased. According to Trulia, since 2006, prior to the recession, the percentage of renters nationwide has increased from 36.1% of US households to 41.1% in 2014. Homeowners have decreased from 65% to 60%. The increase in renters is occurring despite historically low interest rates and ever increasing rents.
The numbers are greater in South Florida. 47.2% of households in Miami are renters. However only 32.6% of West Palm Beach households rent. But, the cost to rent is very high. In Miami, 39.6% of income is spent on rent, Ft. Lauderdale, the number drops to 35.2% and in West Palm, 34.3%. Orlando, only 32.3% of income goes to rent. In contrast, San Francisco renters spend only 27.3% of their income on rent. However, median rent for a one-bedroom apartment in the City by the Bay is a whopping $3,670 per month as of March 1 according to the Zumper Report, the costliest in the nation. Miami checks in 9th at $1,840 for a one-bedroom.
An October, 2015 Trulia Study found that it was 45% cheaper to purchase a home in Miami-Dade County than to rent and 44% cheaper in Broward County. The study assumed a 10% down payment and the median home purchase price. So why do people continue to rent at these very high prices? See my January 11, 2016 post, Rising Interest Rates Highlight Need For New Mortgage Products. An over riding problem facing potential homeowners is the ability to save for down payments. Closing costs, even a 10% down payment on a “starter house” or condominium, particularly in a market like South Florida, can be difficult to achieve. And, when over 35% of income is being spent on rent, savings are virtually impossible.
More access to low down payment loan options and better marketing of these kind of loan programs is necessary to alleviate rental burden so many people face.