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Where can millennials afford to buy homes in Miami?

Typically, financial experts discourage homebuyers from purchasing outside of their price range – when monthly mortgage payments exceed 31 percent of household income, for the most part. But, in some cases, mortgage payments recede over time, especially in cities where wage and income growth are strong.

In Miami, mortgage payments tend to diminish due to the economic growth in the city, making the monthly housing budget more affordable. So while in the beginning payments may seem out of range, they can become affordable in just a few years – or maybe even a few months.

What does it cost to buy a home in Miami right now?

As of October 2015, the median home value in Miami, according to Trulia data, was $241,800. Given this, millennials could expect to spend 36.9 percent of their initial monthly income on housing at the start of a 30-year mortgage. While this would traditionally be considered an “unaffordable” ratio of income-to-mortgage, it only takes 3.7 years for mortgage payments to become affordable, or for millennials to spend 31 percent of income on their mortgages. And at the end of the 30-year mortgage, millennials can expect to spend 19.1 percent of housing on a 30-year mortgage. The decline of percent of income spent on mortgage is due to projected long-term income growth in Miami.

Keep in mind, these figures are based on millennial buyers who put 10 percent down on their home purchases and receive mortgage insurance. Further, Trulia estimated 30-year income growth of millennial households, assuming an inflation rate of 2 percent, to project the future income for the median 25- to 34-year-old household. Further, the median income for Miamians ages 25 to 34 is currently $44,000, and the projected annual income growth is .3 percent.

Where can millennials afford to live now?

Trulia took a look at the neighborhoods with the highest concentration of millennials and assessed whether renters could ultimately become buyers.  There is only one neighborhood where millennials can stay within budget off the bat:

North Miami Beach

The median sales price on homes in North Miami Beach is $200,000, making it already affordable with 20 percent, 10 percent or 3 percent down initially. 

Neighborhoods that can eventually be affordable over time

While initially pricier, mortgages in the following neighborhoods can lessen over time and eventually become affordable for millennials:

Upper East Side

Homes for sale in Upper Eastside Miami are at a median price of $355,000, meaning it takes 8.2 years for mortgages to become affordable with a 20 percent down payment. If millennials put 10 percent down, it takes 11.4 years for monthly payments to be affordable. And, with 3 percent down, payments are affordable after 13.5 years.

Flamingo/Lummus, Miami Beach

The median sales price in the Flamingo area of Miami Beach is $246,000, a widely more affordable range for millennials searching to buy in the higher end. Nonetheless, it would still take 8.6 years for mortgages in the millennial median income to range to be considered affordable with 20 percent down, and 11.9 years with 10 percent down. With 3 percent down, it would take 14.1 years for Flamingo to become affordable.

Brickell

As an upper-end area flourishing with development, with an emphasis on commercial and retail, the median sales price on homes in Brickell is higher at $392,000. It would take millennials 22.8 years for mortgages with 20 percent down to become affordable and 26 years with 10 percent down. For millennials who only put 3 percent down, it would take 28.1 years for mortgages to become affordable.

Wynwood-Edgewater

In Wynwood and Edgewater, eclectic neighborhoods with arts and culture largely attracting millennial lifestyles, home prices are at a median $322,000. It would take 16 years for mortgages to become affordable with a 20 percent down payment, 19.3 years to become affordable with a 10 percent down payment and 21.5 years to become affordable with a 3 percent down payment.

Whether you opt for an affordable neighborhood right away or you choose to wait it out, your home price and mortgage affordability depends on your current income and individual wage growth. Every person is different, so analyze your budget prior to selecting a new locale.

This post appears as part of a content partnership with Trulia, which used its exclusive real estate data to research and report this piece. We weighed in on a Miami vs. New Orleans Local Love showdown that you can read on the Trulia blog

  • Juniper Lemonpledge Clambake

    Hold on, what millennial is making over $40k in Miami?? Is there like one 30-year-old billionaire breaking the curve? Because I know the rest of us are making like no money. I’ll be lucky to break $10k this year. (I work very hard for my $11/hour, thank you.) The job market is abysmal, and the higher requirements for entry-level positions, sheer population competing for jobs, and the exorbitant cost of living combined with our comparatively low incomes make it almost impossible to survive. You wonder why we all still live with our parents? It’s not just because we’re mostly Hispanic, and definitely not because we’re lazy. And if you want to live in an affordable housing area, you end up in a “bad” neighborhood, before it gets bougie like parts of Wynwood now. It’s a real struggle.

  • Juniper Lemonpledge Clambake

    Hold on, what millennial is making over $40k in Miami?? Is there like one 30-year-old billionaire breaking the curve? Because I know the rest of us are making like no money. I’ll be lucky to break $10k this year. (I work very hard for my $11/hour, thank you.) The job market is abysmal, and the higher requirements for entry-level positions, sheer population competing for jobs, and the exorbitant cost of living combined with our comparatively low incomes make it almost impossible to survive. You wonder why we all still live with our parents? It’s not just because we’re mostly Hispanic, and definitely not because we’re lazy. And if you want to live in an affordable housing area, you end up in a “bad” neighborhood, before it gets bougie like parts of Wynwood now. It’s a real struggle.

  • No where! How is Miami sustainable? You build so many thousand units owned by people from China or Brazil who just “flip” real estate… for every ten units there needs to be a SCHOOL. These are homes. Not commodities.

  • No where! How is Miami sustainable? You build so many thousand units owned by people from China or Brazil who just “flip” real estate… for every ten units there needs to be a SCHOOL. These are homes. Not commodities.

  • Amazingly, no mention on the quality of nearby schools, parks, roads, health facilities, access to bike lanes, walkability… or even crime rates, poverty rates, public official corruption levels… how about jobs?! income levels, general cost of living, commute times, traffic congestion, access to mass transit options??

    In your quest to write about “affordability,” you completely left out VALUE, which is a bummer… bc Trulia and others completely have access to these metrics.

  • Amazingly, no mention on the quality of nearby schools, parks, roads, health facilities, access to bike lanes, walkability… or even crime rates, poverty rates, public official corruption levels… how about jobs?! income levels, general cost of living, commute times, traffic congestion, access to mass transit options??

    In your quest to write about “affordability,” you completely left out VALUE, which is a bummer… bc Trulia and others completely have access to these metrics.

  • Teresa Rupp

    Affordable in Miami: 30 years to pay off an mortgage, of coarse its going to be affordable. What happened to 15 years mortgage at a reasonable market value within the income means of anyone? Forever paying off mortgage and student loan, is this quality of life?

  • Teresa Rupp

    Affordable in Miami: 30 years to pay off an mortgage, of coarse its going to be affordable. What happened to 15 years mortgage at a reasonable market value within the income means of anyone? Forever paying off mortgage and student loan, is this quality of life?