Miami is, more than most cities, optimized for people with entrenched, multigenerational wealth. Rent is nearly as expensive as other major American metro areas such as Seattle and Washington, D.C., but the city's median income is a scant $44,000. That's peanuts compared to cities like New York and Los Angeles. This means Miami's sky-high rents are bleeding low-income earners dry. Study after study has conformed this burden, particularly for people of color, who tend to have little savings in the bank.
Now, new research has shown why the city's rent crisis is holding people back: The real-estate website Zillow yesterday showed that Miamians need to spend 95 percent of their annual income to put a down payment on a house.
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South Florida residents are forced to spend far more than the average American on a home down payment: Typical U.S. residents, Zillow says, must use only two-thirds of their yearly income to secure a mortgage. While Miami mortgages cost more than those in cities such as Pittsburgh and Atlanta, they do, at least, pale in comparison to places like San Diego and San Francisco, where prospective buyers must shell out 150 and 180 percent of their yearly incomes to make the average down payment.
Zillow's study proves that the Magic City's gigantic inequality problems are holding people back from accumulating lasting wealth. According to U.S. Census Bureau figures released last week, Miamians use a higher percentage of their incomes on rent than residents of any other place. It's no wonder that 75 percent of locals of color report being "liquid-asset poor," which means they don't have enough savings in the bank to sustain themselves for three months.
And, even if low- and middle-income Miamians save enough to put down a starter payment on a mortgage, the housing market isn't kind: According to a separate study, Miami is the hardest place in America to apply for a mortgage, especially if you're not white.