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$226,000: It's the new norm for homes in Broward County
By Brittany Wallman and John Maines
Broward County home prices are leaving the middle class behind. A South Florida Sun-Sentinel analysis of home sales, construction permits and incomes reveals this disturbing fact: The average Broward County house now costs more than the average Broward County family can afford.
House prices rocketed up far faster than incomes in the last few years, fueled by relentless growth, rising land prices, renewed interest in investing in real estate after stocks sagged, and the lowest interest rates in decades.
Now, even those low rates aren't enough to put a mid-priced house within the range of many middle-income buyers, including teachers, nurses, police officers, architects, bill collectors, clergy and dental hygienists, the analysis showed.
Even those earning better-than-average paychecks are feeling pinched by the growing gulf between the cost of a single-family home and what the median household can pay.
"I can tell you," said regional planner Terry Manning, "it's more than a gut feeling. We're having a problem."
In the past three years as land and building costs soared, developers stopped building single-family homes priced at less than $200,000. As the home-seeking middle class scrambled for a finite pool of moderately priced used homes, prices on them went wild.
The number of older homes available for less than $200,000 plunged, the Sun-Sentinel found. Homes considered "affordable" for the typical Broward household -- $162,000 or less -- dwindled even more. In the past five years, the number of homes that sold for less than $150,000 dropped by half.
As of September, the typical house price was $64,000 more than what the typical family could afford to spend.
The quality of home a buyer can get for $150,000 to $200,000 also took a dive. Homes in that price range are, on average, a third smaller and more than a decade older than what was available just five years ago, the analysis revealed.
Many Broward buyers are looking to less-developed Palm Beach County, but a supply squeeze there also is pressing prices upward. Builders say most of the big, readily developable tracts are already built on, or at least bought. The median price for a used single-family home in Palm Beach County has jumped by 73 percent in three years, while the median family income has risen only about 7 percent.
Current Listing: 3/2 in Oakland Park, on Northeast 15th Avenue. Built in 1960. 1,879 square feet. Terrazo floors. With guest house. Asking price: $264,900.
This house was sold for $196,000 one year ago.
There would be no problem if incomes were rising right alongside home prices. But the prices in Broward shot up at the same time national economic conditions worsened, and workers were bringing home less.
The median household income of $56,400 this year is lower than what families were making the previous two years, according to state figures. That means the size mortgage a family can qualify for dropped just as home prices dramatically took off.
The median existing single-family home this year costs $226,000, according to data from the Florida Association of Realtors. For a new single-family home, the median price in Broward in January was $370,554, according to Integra Realty Resources, a real estate research firm.
But a household earning $56,400 can only afford a house that costs $162,000, according to federal standards, which generally set 30 percent of annual income as the upper limit of what a family should pay for housing. Loans are available for buyers who want to spend as much as half their income on housing, but that leaves less money for living expenses and other debt.
Prices are taking buyers by surprise. Joyce Reynolds, a business consultant and former Philharmonic singer, decided last year to buy a house in Fort Lauderdale. Reynolds didn't expect to pay $260,000 for a house that sold five years earlier for only $136,000. She spent another $15,000 on cosmetic fixes.
"I think I made one Realtor laugh," Reynolds remembered when asked what she wanted to spend, "because I said, `Oh, about $150,000 or so.'"
Reynolds could afford more. But many cannot.
Only the top echelon of Broward jobs -- like dentists, doctors, computer software engineers and optometrists -- deliver the $76,000 or more a year a single person needs to afford higher housing costs.
That means compromise: Families must have two incomes, or turn to lesser homes, or to condos or townhouses.
Current Listing: 3/2 in Wilton Manors, on Northeast 6 Lane. Built in 1988. 1,278 square feet. Tile floors, shingle roof. Asking price: $250,000.
This house last sold for $80,000 in 1999.
After months of searching countywide, the Padilla family, who rent an apartment in Sunrise, know how difficult it is to find a home that's affordable -- and acceptable.
"We just wanted to rent for one year and then buy a house. Easier said than done," said Jacquelyn Padilla, a married mother of two who moved from New York "for a better lifestyle for the children."
The Padillas set $205,000 as their maximum. They wanted each daughter to have her own room, and they wanted a spare. A big yard. Good schools. A pool would be nice, too, Padilla thought.
Broward sales data show how difficult their quest would become. In 1998, two-thirds of all single-family home sales were for homes that cost less than $150,000. By this year, they made up less than a third of such sales.
Similarly, in 1998, four of every five Broward homes sold for less than $200,000. Now only half do.
The Padillas came to realize they would have to settle for three bedrooms, forget about the pool, scale down the yard. They found an older home in Tamarac that needs work, and put it under contract recently for $200,000.
Not only has the number of single-family homes that could be purchased for $150,000 to $200,000 declined; so has the quality of those that remain.
In 1998, the average home in that range was 2,349 square feet and eight years old. In 2003, the most that money would buy was a house that's 1,601 square feet and 23 years old, the Sun-Sentinel found.
"A lot of the homes were just run-down, not well kept, needed some work," said Padilla, who stays home to care for Shaliyah, 2, and Sadee, 5. Her husband, William, builds elevators.
Their Realtor, Peter Orenchuk, said he has to give all his buyers a "sad education" about how much it would cost to buy that imaginary home they carry in their mind's eye.
"It's depressing for them," said Orenchuk. "When they see what's out there for even $200,000, it's pretty scary."
Current Listing: 3/2 in Tamarac, on Blue Jack Oak Circle. 2,216 square feet. Built 1970. Golf course view. Asking price: $244,900.
This house last sold for $175,900 last year.
Home prices inched up steadily for decades. Then, as vacant land became scarce, prices took off.
From 1995 to 2000, the median price of a home grew by $50,000. The next $50,000 leap came in two years. In the first nine months of this year, prices rose another $28,600.
Nearly every neighborhood in the county has followed the home-price trajectory.
The newspaper's analysis of building permits during the same period shows that buildout in Broward is a factor in the price escalation.
"We're running out of land, and we have more people coming in," said Terry Manning, a planner for the South Florida Regional Planning Council. Demographers figure another 750,000 people will move to Broward by 2025.
The number of single-family homes being built here has been plunging, and starting last year, developers were pulling permits for more multi-family projects -- townhouses, apartments, condos -- than for single-family homes.
Broward isn't unique. Prices across America are squeezing low- and moderate-income buyers out of the housing market as investors pump money into real estate.
Developers say it's impossible at this point to build less expensive housing without government subsidies, because of increases in building costs and land prices, more stringent building code, and impact fees.
"Land prices are so expensive, so astronomical, it is almost prohibitive to build affordable housing," said Tony Mijares, chairman of United Homes International Inc.
But there's no constitutional right to affordable housing, and no requirement that government provide it, or force developers to build it.
"There's incredible demand, crisis-level demand," said developer Lloyd Boggio of The Carlisle Group in Miami, which builds subsidized-affordable housing. "But what good is demand if what they can pay won't produce a profit? Developers don't build to fill demand. Developers build to make a profit."
Current Listing: 3/2 in Deerfield Beach, on Southeast 14th Drive. Built in 1962. 1,321 square feet. Enclosed porch, tile floors. Asking price $249,900.
This house last sold for $181,000 one year ago.
People are struggling with mortgages beyond their means, moving into smaller, older homes than they wanted and commuting here from other counties such as St. Lucie where housing is less costly.
"The critical concern here in Broward County is affordable housing," said Richard Barkett, CEO of the Realtor Association of Greater Fort Lauderdale. "It's critical enough that it's blocking out the first-time homebuyer."
Mary Ann Korkuc commuted to her Realtor job in Broward from Port St. Lucie for nine months, until she got a job closer to her new home.
"I got 2,400 square feet under air on a quarter acre lot with upgrades for $180,000," she said of her new house. Several of her neighbors also travel to jobs in Broward from their nice homes up north.
The upward spiral is hitting even modest neighborhoods.
Pegi Houseman's Poinsettia Heights neighborhood in Fort Lauderdale looks much as it did when she moved there from Canada 50 years ago and bought her house for $16,000.
Only the prices have changed. One neighbor rents out part of his house so he can meet the mortgage, she said. Across the street, a tiny, run-down home is on the market for $240,000. Realtor Orenchuk said no home in that neighborhood was listed at less than $200,000 .
"I watch the Home & Garden channel," said Houseman. "This couple bought a 16-room house with four bathrooms for $180,000, and restored it up in New England somewhere. I thought, `My God, they'd croak if they came down here and saw these little ticky tacky boxes and the price they're getting."
Brittany Wallman can be reached at bwallman@sun-sentinel.com or 954-356-4541. John Maines can be reached at jmaines@sun-sentinel.com or 954-356-4737.