Millennial renters in South Florida want to buy, but a study found that less than half of the population can afford to do so.
A study by Apartment List, an online rental listing platform, surveyed renters ages 23 to 38 over the past five years within 16 U.S. metro areas. Researchers considered what percentage of millennial renters in a given metro area could afford a down payment of 20 percent, 10 percent or 5 percent within the next five years.
Not many millennial renters in Broward, Miami-Dade and Palm Beach counties could afford a median-priced condo of $202,500. The study found that only 13 percent of millennial renters could afford a 20 percent down payment, 30 percent could afford a 10 percent down payment and 43 percent could afford a 5 percent down payment.
Despite less than half of millennial renters being able to buy, Miami is still among the five metro areas with the highest percentage of millennial renters on track to put 10 percent down on their first home within the next five years: Minneapolis (34), Houston (34), Philadelphia (33) and New York (31).
“Millennial renters in Miami are looking good. It’s surprising. Despite high rents, millennial renters are able to save a little more than their counterparts in other markets,” said Apartment List Chief Economist Igor Popov.
The lack of state and city income taxes compared to other cities like New York may be allowing renters to save more, said George Jalil, broker and president of First Service Realty ERA Powered.
The percentage of millennial renters wanting to buy will shape South Florida’s real estate, said Jalil. “In another three to four years, you’re going to have developers build lower-priced properties and rental communities.”
The study also considered the percentage of millennial renters that expect to lease for the rest of their lives: Miami and Philadelphia were the only cities that had the highest percentage of millennial renters on track to buy a home within the next year with the most optimistic attitude about their first-time purchase. About 8 percent of millennial renters in Miami and about 9 percent in Philly believed they would rent for the rest of their lives.
Renters in Miami may be more optimistic about buying since they may be looking to relocate elsewhere in the state to buy, said Popov. He found Miami renters are looking to relocate to Tampa, Jacksonville and Orlando.
“Sometimes people are optimistic,” said Popov, “because they have that exit plan of going to a place where their savings are enough for that first home.”
Millennial renters in San Francisco (17 percent), New York (15), Los Angeles (15) and Chicago (13) believed they would rent for the rest of their lives.
When it comes to buying their first home, said Jalil, millennial renters are looking at town houses in Cutler Bay and Miami Gardens in Miami-Dade County. In Broward, millennial renters often consider Pembroke Pines, Hollywood, Tamarac, Coral Springs and Cooper City.
“What these results are telling us is that we shouldn’t expect millennials to rush into the first-time home buyers’ market as Gen Z and baby boomers” did, said Popov.
The Miami metro area is among the least affordable rental markets in the country, according to a 2018 study by Apartment List. Despite millennial renters wanting to buy, stagnant wage growth hinders the majority’s chances of doing so anytime soon.
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