Tibor and Sheila Hollo School of Real Estate Beracha, Hardin and Johnson Housing Affordability Index

The Beracha, Hardin and Johnson Housing Affordability Index, published quarterly, measures the affordability of residential properties in Miami-Dade, Broward and Palm Beach counties. The findings are based on average property prices relative to median household income (price divided by income) in each county, as well as average mortgage payments as a percentage of income (a payment divided by income).

Income data comes for the Federal Reserve. Mortgage rates are for borrowers with top tier credit with Freddie Mac as the source. For the payment-to-income calculations, the assumption is a 20 percent down payment and the payment includes principal and interest, but does not include any other housing expenses.

The charts below illustrate changes in housing price to income and housing payment to income from 1997 to 2018. The orange line represents the average value over that period. When the index score is above the line, housing is less affordable, on average, for he period. When the index score is below the line, housing is more affordable on average.

Current Summary
Residential housing, based on both price-to-income and payment-to-income is above the long-term averages, implying residential ownership is currently more expensive, on average, for its long-term trend. Relative to Broward and Palm Beach counties, residential housing is most expensive in Miami-Dade. However, cost of ownership is still below peaks attained prior to 2007 – 2008.