Miami's mortgage payment hike could stall house hunting

Despite signs of Miami's real estate market cooling, prospective buyers putting off looking for a home until prices get more affordable probably have a long wait.

What's happening: The typical homebuyer in metro Miami-Fort Lauderdale is spending 44% of their household income on mortgage payments, according to a new analysis from Zillow.

• That's well above the national average of 30%, which is also the threshold at which buyers are considered "cost burdened" by housing costs, Zillow notes.

From 2005 to 2021, homeowners in the Miami-Fort Lauderdale metro area have spent much less of their income — about 30% on average — on mortgage payments than they do now, according to Zillow.

Why it matters: For mortgage affordability to return to pre-2022 levels, South Florida home values would have to go down by 33%, which Zillow analysts said is highly unlikely.

• Home values in greater Miami have risen 26% year over year, and Zillow predicts home values nationwide will remain nearly flat through 2023.

Another mind-blowing stat: The typical mortgage payment in the Miami-Fort Lauderdale metro area is $2,452 a month, according to Zillow. That's almost double the figure in September 2021, when it was $1,248.

• Miami-Fort Lauderdale has the third-highest annual increase in mortgage payments among the top 100 metro areas, per Zillow.

What they're saying: "The next several years appear set up for affordability to be a major challenge for home buyers," said Zillow senior economist Nicole Bachaud in a press release.

• "Inventory remains tight, real income growth is dismal, mortgage rates show no signs of dropping, and there is plenty of pent-up demand ready to bid prices back up if they reach a level would-be buyers can once again afford."