Rental prices in Florida are on the rise even as home prices are becoming for affordable. The Center for Housing Policy recently released its findings on a comparison study of the Florida metropolitan area between 2007 and 2008, called “Paycheck to Paycheck: Wages and the Cost of Housing in America.” The main culprit is hard to pinpoint, but many analysts believe it is the rise in foreclosures and unemployment that is pushing people who can no longer afford homes into rentals.
Rents Go Up with Demand
Because the demand is now greater for renting, prices have gone up to reflect it. But it’s not just Florida. The same increase in renting is affecting the entire country, as most major metropolitan areas have experienced at least a slight increase year over year. Here is an idea of rental costs in several major cities in 2008 compared to the previous year.
- Fort Lauderdale: Average monthly rent, $1,313 (#13 most expensive city to rent in; it was #27th in 2007)
- San Francisco: Average monthly rent, $1,658 in 2008 (#1 most expensive city to rent in)
- Honolulu, Santa Cruz, Suffolk-Nassau, and Santa Ana followed San Francisco as the top 5 most expensive cities to rent in
Lower Home Prices Good News for Some
The continuing decline in home prices has dramatically lowered the price of home ownership. According to one analyst, the national average income required to buy a median home was only $60,000 a year. Local markets are drastically different however, as Market Watch noted it required only $24,000 a year to buy a home in Youngstown Ohio, while a home in San Francisco would require an annual income of $187,000.
Homes in areas hardest hit by foreclosures and unemployment have become even more affordable. In Oakland, Modesto, Stockton, Salinas and Merced, California, home prices were cheaper by 47-54% compared to the previous year. Analysts were quick to point out that the decline in home prices is still not enough to resolve the country’s real estate woes. Contractors and other professions who thriving as a part of the stimulus bills still have trouble affording their rent each month, and something must be done in order to address the real issue affecting the economy: unemployment. As home prices continue their downward slide and mortgage rates hold at low rates, there will be a point where the bottom will be reached and homes will become affordable again. There are only two ways to solve this crisis. Either home prices must drop to correspond with salaries, or everyone will get a 100% raise and unemployment must slow. Which do you think will happen first?
Can people you know now afford to buy homes when they were priced out in 2007?
