Miami’s hot housing market tough area for first-time buyers
Growing up in Miami, Vince Rives knew he wanted to stay local, because he’s close to his Cuban family. Raised between his parents’ house in Kendall and his grandparents abode in Westchester, Rives, 29, recalled a happy childhood.
Weekends were spent in the backyard by the pool with his two siblings, cousin, grandparents and parents eating barbecue and his father’s famous black beans.
Three years ago, Rives thought about leaving his family’s new home in Coral Terrace for a place of his own. After marrying in December 2020, he and his wife moved in with his parents, so they could save money for a down payment to buy a three-bedroom townhouse.
As a multimedia producer in the communications department at Florida International University, he makes $60,000 a year. Together, he and his wife, Maria, earn $120,000 and a little extra from working side gigs. They looked in Westchester, Kendall, Homestead, and Doral, their favorite area, for a $350,000 home.
Three years later, the couple is still searching — eventually hoping to become first-time homeowners. Many other aspiring buyers in Miami-Dade are in the same boat as the Rives, unable to pay what it typically costs to buy their first home in a pricey housing market.
Indeed, the number of purchases made by first-time homebuyers countywide declined in 2022 from the prior year, according to anecdotal information from real estate experts at Florida International University and the Housing Finance Authority of Miami-Dade. They blame escalating mortgage interest rates and median home sales prices well north of $500,000 for blocking many people from attaining homeownership.
Although local data wasn’t available, the share of first-time buyers among total U.S. home purchases in 2022 fell to a record low of , according to the National Association of Realtors. That was down from last year, a peak of in 2010, and the lowest mark since 1981, when the Realtors’ group started compiling the annual data.
Miami-Dade has priced out first-time homebuyers long before the pandemic emerged in March 2020. Foreign transplants and low wages made it more difficult to buy. The pandemic exacerbated tight housing conditions with the arrival of deep-pocketed buyers from across the country, particularly New York City, Boston and Chicago.
“We’ve been going through this for three years,” Vince Rives said of losing out to buyers who offer more than the asking prices. “… I can’t imagine how much crazier it’s going to get. It’s difficult. I would always say Miami is the American dream. People left their country to have a better life for their family [here]. At the moment, it’s unattainable.”
Housing inventory remains slim, although there’s a greater supply on the market than a year ago. Miami-Dade had 9,880 homes, including condos, houses and townhouses, for sale in March. That’s up from 6,594 listings year ago, but far fewer than the 23,363 homes on the market in March 2019, the year before the pandemic, according to Multiple Listing Service data and Berkshire Hathaway HomeServices EWM Realty’s real estate agent Scott Shuffield. That means first-time buyers have fewer homes to pick from in a competitive housing market.
Interest rates present another challenge. As of Thursday, Freddie Mac reported an average for a 30-year mortgage, considerably more than the average a year ago. Midpoint prices have fallen in Miami-Dade from the peaks reached last year — $579,000 for single-family houses in June and $415,000 for condominiums in May. Still, they remain high, standing at $555,000 for houses and $390,000 for condos.
For first-time buyers, the silver lining is many Miami-Dade lenders offer those qualified down payment assistance programs to land their first homes, real estate experts said. And so far this year, the county’s sizzling housing market has begun to cool.
“If they are able to afford a home, they have more negotiation power than they might have had a year ago,” said Eli Beracha, real estate professor and director of FIU’s Tibor and Sheila Hollo School of Real Estate. “Listings are sitting longer on the market. Buyers are able to negotiate the price a little bit more.”
From aspiring to buying
For the past 15 years, Santiago Rodriguez was a renter in South Florida. At 14, he moved with his mom from Bogota, Colombia. She came for better work opportunities. The diversity of Miami kept him here.
“As an adult, it is one of the cities that has a mix of cultures like New York, but it’s a new city with more opportunities,” Rodriguez said. “And the sun is shining most of the time.”
He’s rented in Midtown Miami and, more recently, in Mid-Beach. Everything changed a year ago. As a real estate agent for Douglas Elliman and the founder of the real estate investment and property management firm Stayplus, Rodriguez thought investing in the real estate market would be wise. That’s when he decided to start saving to buy a home, putting of his income into savings and investing through the financial service application Robinhood Markets.
After a six-month home search starting in January 2022, a deal landed in his lap. One of his clients who rented her condo decided to sell. She offered it to Rodriguez for the same price she paid for it three years ago.
He jumped at the offer, buying the 1,000-square-foot condo, with a bedroom and den on the 40th floor of the Paraiso Bay Views condominium in Edgewater, for $433,000. Rodriguez and his wife, Alice Teodoro, will move in this summer.
“It was amazing. The closing date was on my birthday,” he said. The lesson he learned that helped him land his first home? Sharing his homebuying plans. “It’s good to tell everyone that you’re looking, because you never know who they might know that might be selling.”
Financial checklist
Before starting their home search, real estate experts said striving first-time owners should reduce credit card debt, save six months of income and make sure they have a credit score of at least 660.
Since it usually takes years to save for a down payment on a home, it might come as no surprise that the median age of a first-time homebuyer in Miami-Dade was 32 and in Broward 33 as of 2021, according to the U.S. Census Bureau’s American Community Survey. Nationally, last year the typical first-time buyer was 36, the oldest since the U.S. Realtors’ group began tracking such data over 40 years ago.
For those ready to become homeowners, experts say start by choosing a real estate agent. Berkshire Hathaway’s Shuffield said an agent will recommend a lender known for providing residential mortgages to those desiring to buy their initial homes. The lender will prepare the underwriting documents, lock in a mortgage rate and recommend down payment assistance programs.
In Shuffield’s experience, his area first-time buyer clients typically spend between $300,000 and $600,000 on a condo or townhouse, or $550,000 and $850,000 on a house. He said they often find the best deals on condos in Kendall and Dadeland and on houses in Westchester and West Miami.
Once a buyer finds an appealing home, Shuffield said move quickly with an offer, within 24 hours. The seller will consider the offer and, if choosing it, sign a contract and send it to the buyer. The buyer has 30 days, the first week of which should include a home inspection. The buyer can renegotiate the price if an inspector identifies much-needed upgrades. A buyer who gets cold feet also has the right to cancel a deal within that time.
“In any market, it’s scary as the first-time homebuyer. It’s your largest investment,” Shuffield said. ”In some ways, it’s like getting married. It can be scary at first, but it’s the excitement that gets you through it.”
Government help
The United States was primarily a nation of renters until the 1920s, said Paul George, HistoryMiamiMuseum’s resident historian. The Roaring Twenties changed priorities. Banks and mortgage companies stepped into lend to aspiring homeowners. The federal government started helping decades later during World War II.
After funding construction of public housing, Franklin D. Roosevelt’s administration turned to housing assistance for veterans in 1944 with the start of the G.I. Bill. It came on the heels of the public criticizing the government’s lack of benefits for veterans after World War I. The rest, as they say, is history as federal, county and local homebuyer programs began.
Dan Suarez, 30, who served three years in the U.S. Navy, plans to lean on Veterans United for a mortgage with a zero down payment. After his military stint, Suarez used the G.I. Bill to attend the University of Central Florida in Orlando. He graduated last summer with a degree in accounting. He landed a job with Miami-Dade County as an accountant, earning $46,000 a year. The thought of staying in Orlando appealed to him, but growing up between Kendall and Homestead, he was drawn back home to his family in Miami. He now lives at home with his parents, while he saves for a one-bedroom condo in or near the urban core.
He started hunting for a home in January with a $176,000 budget, the maximum allowed by Veterans United based on his credit score.
He hopes to score a home before the summer, when he’ll begin graduate studies in accounting. If he doesn’t achieve his goal, Suarez said, he plans to rent his own place. He wants a fresh start.
“It is so expensive. Should I pay $2,000 and HOA for a place I don’t care for or should I pay $2,000 for a place that I care for?” Suarez said. “I need my own space. I’m 30 living with my parents.”
The Housing Finance Authority of Miami-Dade, a government agency that provides assistance with down payment and closing costs to first-time homebuyers, helps households of up to two people that make a combined income of $97,500 and households of three people or more that together earn $112,125. It also has a home purchase price limit of $382,194 for a condo, townhouse or house. In addition to mortgage lending, the agency provides $15,000 towards a down payment to qualified first-time buyers.
The lending rules and income limitations are set by the federal government, said Housing Finance Authority chief financial officer Adela Garcia.
Some first-time buyers turn to their families for assistance. FIU history professor Keyao Pan landed his first home, a two-bedroom townhouse for about $300,000 in the Fontainebleau area, minutes from FIU’s main campus — thanks to his family.
Last year, Pan decided he would wrap a yearlong post doctorate fellowship at Harvard University and then move to Miami to accept a job at FIU. He intended to lean on his family for help with the down payment. After searching two months for a home, he and his family decided to make cash offers. That’s what helped him buy the place he moved into in August.
“Is anyone happy in this market,” Pan said. “The market doesn’t have a lot of niches that people need right now, like affordable housing. Miami seems to be in a paradox, where it is pushing people away. When the density isn’t there, people have to commute and live relatively far away from where they work in order to cut costs. If there is more reasonable planning, there might be better density and that might drive down prices, too.”
Resources for first-time buyers
Experts recommend:
▪ Housing Finance Authority of Miami-Dade