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Miami Times - Oct. 1, 2014
South Florida housing costs create financial burden
MDEAT study says low-income, Black neighborhoods hit hardest
By Chloe Herring
If you’ve ever felt you were paying too much for your home in South Florida, you probably were right, especially if you live in a Black neighborhood, according to a new report from Miami-Dade Economic Advocacy Trust (MDEAT).
The report, called Annual Report Card and Scorecard, shows that low-income, Black people are dishing out more of their earnings on housing than they should, but the numbers point to a broader problem that has real estate analysts worried about the overall economy.
John Dixon, the executive director at MDEAT, said the housing problem is so serious he told his daughter to move. MDEAT will present the study’s findings to the board of county commissioners, but Dixon said people shouldn’t expect major policy change.
"That ain’t going to happen," he said. "MDEAT cannot drive policy to make it cost less money to live here."
Indeed, landlords and the market drive the cost of housing.
Cuthbert Harewood, a Miami native who lives in Liberty City, feels the pressure of being both a South Florida homeowner and landlord. The monthly mortgage for one of his properties is $600, but he charges renters double to cover the costs of repairs, upkeep, taxes and insurance.
As his costs increase, so does the rent for his Opa-locka and Liberty City properties.
"The house ain’t getting no bigger but the price of the house is going up and everything inside of the house is going up," Harewood said.
The financial strain of housing costs affects 17 neighborhoods identified by MDEAT, including Liberty City, Overtown, Goulds and the Northwest 27th Avenue corridor.
In Black neighborhoods, the highest median rents extend up to $2,001, which is almost twice the median monthly housing costs in South Florida. The rent Harewood charges his tenants – $1200 a month – is competitive compared to market prices, but that doesn’t mean the costs are affordable.
Housing should not drain too much of a family's earnings, according to a term called cost-burden, which puts the reasonable percent of income a person can spend toward housing at 30 percent.
Most homeowners – more than 55 percent – in West Grove, Opa-locka, North Miami West Dixie and North Miami Downtown pay mortgages that exhaust a large portion of their incomes. For North Miami West Dixie, North Miami Downtown and Model City, housing costs present a financial burden to nearly seven out of every 10 renters.
"You’ve got people that are very hard-pressed to pay their housing costs on a monthly basis," said Jack McCabe, a real estate analyst.
McCabe predicts a lack of affordable housing options will soon send the economy crashing down. He said housing costs will drive lucrative businesses away because they will have to pay employees more to live in homes. The economy will suffer in Florida, he said, in a state with the lowest number of Fortune 500 companies, compared to other large states.
Edward Murray, a Florida International University professor and lead investigator in MDEAT’s study, said the share of cost-burdened households is exacerbated in poor, Black neighborhoods, called Target Urban Areas, but finding affordable housing is a problem for everyone.
"When things go bad, the poorer areas are always hit hardest. You can see their numbers are extreme in some cases. [But] it’s countywide – the housing issue," he said.
With South Florida counties combined, about 49 percent of homeowners spend a third or more of their income on a place to live. For renters the housing problem is more dismal: two-thirds of them pay too much of their income for housing, according to a Harvard Study. In Miami-Dade, Broward and Palm Beach counties there are a total of 948,000 households that are considered cost-burdened, making South Florida is one of the only places in the nation where the share of cost-burdened homeowners is nearly half the population. It all means you're not alone in paying a lot to keep a roof over your family's head.
The high costs of housing present a point of conflict for Harewood, who knows his tenants struggle economically.
"It’s great for me because I get to go up on them," he said. ‘[But] how do you expect to make rent reasonable when you’re driving everyone out of the community?"
The lack of affordable housing options is creating a flight out of cities to places like Homestead and Florida City where service workers find cheaper prices, which McCabe said will erode South Florida’s service economy.
"We’re at a very crucial point right now," said McCabe. "We don’t have the time to wait 20 years, we need to do something now to change housing."
But changes are unlikely. The cost of land influences market prices, but developers are spending big bucks. Murray says county leaders are ignoring the residents of Miami-Dade in favor of developers who are catering to foreign interests, even as young families, recent graduates and retirees find the prices less attractive.
"We have not taken this public policy issue seriously. Every block there’s a crane, luxury condos; for most people, that’s a sign that the economy is coming back," Murray said. —Twitter @chloeherring3