New national real estate data shows Miami hit hardest by higher interest rates, stagnant incomes

by | Jun 6, 2023



  • Miami experienced the second-highest home price increase in the nation over the past 12 months, trailing only Hartford, Connecticut.
  • Home price growth in Miami and other Florida metros has started to align with the national average due to factors like income levels, inflation, and mortgage rates.
  • Miami is one of the least affordable places to live, with rapidly rising home prices compared with relatively stagnant income levels.
  • National data shows that inflation and high mortgage rates are putting negative financial pressure on both new home sales and current homeowners.

Over the last year, Miami posted a second place finish nationally in home price increases, posting a 6.7 percent gain over the last 12 months, trailing only Hartford, Connecticut, which posted a 7.6 percent gain year over year. No other Florida metros made the top 10 in home price gains. That data comes from a new mortgage monitor report issued by Black Knight, a mortgage data and analytics company based in Jacksonville, Florida.

The report also shows that more recently, home price growth in Miami and other Florida metro areas have started to revert to the national average as income levels, inflation, and mortgage rates put downward pressure on the Sunshine State’s real estate markets. All Florida metros were firmly middle of the pack in overall price growth through April 2023.

In terms of affordability, the latest data also shows that Miami remains the one of the least affordable places to live in the nation – determined by comparing home prices with income levels, ranking 5th worst overall, as home prices continue to climb while paychecks remain stagnant. Nationally, it currently takes 34.2% of the median household income to make principal and interest (P&I) payments on the median-priced home purchased with 20% down using a 30-year fixed-rate mortgage. and that could be trending even worse. On Monday, Black Knight reported that Freddie Mac’s latest average 30-year rate of 6.79% will push the average new homeowner’s payment to-income-ratio above 35 percent.

Interest rates that are outpacing income gains have held back the national real estate market. That’s because in addition to the impact on buyers, it’s also hurting sellers, who typically have to get a new mortgage when they move after selling their current home.

“While elevated interest rates continue to weigh on both affordability and demand, they’re simultaneously constricting supply as well as would-be sellers who locked in ultra-low rates early in the pandemic continue to sit on the sidelines,” says Andy Walden, VP of enterprise research strategy for Black Knight. “The combination of lower supply and demand in April led to both slowing sales and firming prices.”

The overall lack of affordability is also coming home to roost in the form of delinquent mortgages and foreclosures. Florida ranked 18th nationally in non-current mortgage percentage, with 4.1 percent of all mortgages either falling behind or in active foreclosure. That’s slightly higher than the 3.8 percent national average.

Nationally, home sales volumes fell in April, as a lack of both affordability and total homes for sale continue to create major market headwinds.

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