With soaring prices, first-time homebuyers programs pushed to irrelevance in South Florida

Since Miami-Dade County’s first time homebuyer program was created in 1995, nearly 8,000 families have received local government assistance purchasing their first homes.

For years it was normal for hundreds of families to receive help making a down payment and help in finding financing for their homes.

But data obtained by WLRN shows that since the housing market crash of 2007, the number of families accessing the assistance in South Florida has plummeted.

In the 2007-2008 fiscal year, 202 families bought a home through the Miami-Dade program. Yet in fiscal year 2021-2022, only 32 families used the program.

The key cause is a familiar one: Miami-Dade is now broadly considered the most unaffordable housing market in the nation. And as the ultra-wealthy continue to move into the area, they are also skewing other key qualification criteria against low and medium-income families.

In a recent press conference, Miami-Dade Mayor Daniella Levine Cava answered a question about what accounts for that downward trend.

“The problem is finding a house that is affordable,” said the mayor.

WLRN’s reporting shows that record high property values in South Florida are pushing both local and state first-time homebuyer programs to irrelevance in South Florida, even while they continue to work in other parts of the state.

For example, in 2021, state programs helped 781 people make down payments for their first home in Duval County, which includes Jacksonville. That same year in Miami-Dade County, only 43 people got that help: $10,000 in assistance for a down payment.

There’s a simple reason for that sharp disparity between housing markets, according to Trey Price, executive director of the Florida Housing Finance Corporation. The corporation was created by the state government to manage Florida’s statewide first-time homebuyer program and other affordable housing programs.

“Ten thousand dollars in Miami-Dade doesn’t go as far as it does in Duval County,” said Price. “The median home price in Miami Dade is probably upwards of half a million dollars. So that definitely has been an issue, especially for high priced areas like the Florida Keys, South Florida.

“Now we’re even seeing some issues in some of the coastal areas up here in North Florida. First time homebuyers are really needing to buy more inland, and smaller houses. So that’s definitely, I think, part of the reason why we’re not seeing as much of our product in Miami-Dade.”

The average price of a home bought through state programs in Duval, where the median home price is $300,000, was $209,801 in 2021. In Miami-Dade, it was $252,251, well under the current median home sale price of $530,000 in the county, according to Redfin.

Overall, the outcome of this dynamic is staggering: according to an annual report from the state, more than four times the people used the state programs in Jacksonville last year compared to the number who used them in the entire population between Key West and Palm Beach County.

Only 65 people used state programs to buy a home in Broward County that year, and in Palm Beach County only 51 received that assistance. In Monroe County, which includes the Florida Keys, zero people used the programs.

In Leon County, which includes Tallahassee, 169 people got that help. In Bay County in the Florida Panhandle, 333 received assistance; in Polk County, 202; in Volusia County, 157; and in Hillsborough, which includes Tampa, 293 got state help purchasing their first home.

One of the reasons these program work in places like Jacksonville and Tampa and are barely working in Miami-Dade is that the programs cap how much money someone can make in order to qualify, said Grant Stern, a political commentator in Miami who is also a mortgage broker.

The cap is dependent on the local market and median income for the area, so it varies widely across the state.

“Median incomes in South Florida are influenced by the ultra wealthy people that are moving into South Florida,” said Stern. “The median income, which means half is higher and half is lower, is in the $60,000 range. But the average income is lower than that.

“And the average person who’s working in the service industry, for example, is making maybe $30,000 a year. They’re not making that $60,000 number. So the confluence of events to peg everything to one standard, locks people in an urban market like Miami-Dade out of buying into this market.”

Local government first time homebuyer programs vary in how much income someone can make; in Miami-Dade someone can make up to 140 percent of the area median income, which comes out to $109,200 for a family of two. For the City of Miami and North Miami’s first time homebuyer programs, someone can only make up to 80 percent the area median income, adding up to about $62,400 for a family of two.

Another reason for the sharp disparity between housing markets is that there are also caps on how much monthly debt someone can carry for car payments and student loans and other debt obligations, said Stern. In Miami-Dade, presumed mortgage payments and other payments for things like student loans, child care payment and credit card debt can add up to a maximum of 45 percent of someone’s gross monthly income.

The problem, as Stern sees it, is that households that could possibly qualify for the program based on income usually have too much debt to receive the benefit.

Having close to no debt is a rarity, he said.

“In my experience, that’s not how households usually function,” said Stern. “I can’t imagine that with income restrictions – if they’re at the median income – I can’t imagine that anybody can qualify for these programs because you literally have to be like the perfect test case.”

Medium-income people, then, are often locked out of the programs because they either make too much money, or they carry too much debt. And for the truly low income people, the chances that they can actually afford a mortgage payment with high prices, high interest rates, high insurance and large down payments is close to zero, said Stern.

Not in a market like Miami-Dade.

The Hometown Heroes Program

But a new first time homebuyer program is changing how many people qualify for this kind of assistance.

Earlier this year the Florida Legislature passed a law creating what’s called the Hometown Heroes Program. The program raised the income caps for essential workers like police officers, teachers, firefighters, prosecutors, veterinarians and other listed professions, and expanded their access to state assistance purchasing homes.

Essentially, they can make more money and still get help for down payments. The amount of state help they get for down payments has gone up from $10,000 to $25,000 in assistance.

“So far, it’s going gangbusters,” said Price, with the Florida Housing Finance Corporation. “It’s pretty exciting to see that program take off. We’re doing a lot of registered nurses, a lot of veterans, a lot of teachers, and that’s all since the program went into effect on July 1st.”

Loosening up the qualifications for receiving state assistance has quickly and dramatically changed the landscape in the Miami-Dade market: The Hometown Heroes program only went into effect in July, and by late September 119 people in Miami-Dade already used the program to purchase their first home. That’s about three times as many people who got the assistance from the regular program during the entire previous year.

Grant Stern says this is good to hear. But he said it raises other concerns.

“It shows how much this is a public policy decision,” he said. “So we’re saying: ‘well, people that are firefighters, cops and teachers work in the public sector — we’re going to accommodate housing policy to accommodate them.’

“How is that fair to people that work in the hospitality sector? They perform an important service. How is it fair to somebody that works at Publix? I like to eat, don’t you? They’re not part of the public sector, so they don’t get the benefit.”