Housing across South Florida is becoming slightly more affordable, according to the latest housing affordability index from Florida International University (FIU) and Florida Atlantic University (FAU).
![Bill Hardin](https://biznews.fiu.edu/wp-content/uploads/2018/12/william-hardin.png)
The quarterly Beracha, Hardin and Johnson Housing Affordability Index measures the percentage of income dedicated to housing payments, and the cost of homeownership relative to average annual income, in Miami-Dade, Broward and Palm Beach counties.
For the first quarter of 2019, the average mortgage payment in Miami-Dade accounted for 29.4% of average monthly income in the county, measuring an increase in affordability from last quarter’s score of 31.6%. The average property price traded at 6.07 times average annual income for the county, down from 6.23 for the previous quarter—another measure of increasingly affordable housing.
“These scores are a good sign for housing affordability in Miami-Dade,” said Bill Hardin, professor at the Hollo School of Real Estate and associate dean at FIU College of Business. “While we are currently above the long-term average affordability scores of 26.6% and 4.84, the change in direction hopefully indicates that housing affordability is beginning to head in the right direction.”
![Eli Beracha](https://biznews.fiu.edu/wp-content/uploads/2019/06/Eli-Beracha.png)
A similar pattern holds true in Broward. Broward county residents dedicated 21.3% of their monthly income, on average, to their mortgage payment, down from 23.2%. The property price to annual income ratio is down from 4.57 to 4.40.
“Declining mortgage rates have really helped here in terms of the monthly cost of homeownership”, said Eli Beracha, associate professor and director of the Hollo School of Real Estate. However, he warned, “falling mortgage rates could serve as a headwind for affordability, as lowering mortgage rates can prop-up property prices, stalling the peak of the area’s current housing cycle.”
The news is good in Palm Beach county as well, where the monthly cost of housing has fallen to 17.1% of average county income, down from the previous quarter’s score of 18.6%. The ratio of property price to annual income currently rests at 3.53 versus the previous multiple of 3.67.
![Ken Johnson](https://biznews.fiu.edu/wp-content/uploads/2018/12/ken-johnson.jpg)
“With a looming peak in the tri-county housing cycle, the resulting downward pressure on the demand for homeownership should work to moderate property prices and assist in housing affordability in all three counties,” said Ken Johnson, professor and associate dean at FAU.
Beracha, Hardin, and Johnson all agree that the current change in direction toward more affordable housing is driven by a combination of falling interest rates, a warming job market, and slowing property appreciation.
The Beracha, Hardin and Johnson Housing Affordability Index is a collaboration between Eli Beracha and William G. Hardin of FIU and and Ken Johnson of FAU. The group also collaborates on the BH&J Buy vs Rent Index, with a collective goal of providing real estate information critical to consumers of real estate.