83 Year Old First Time Home Buyer

At 83 years old, Alget Campbell isn’t as nimble as he used to be. His joints are a little rusty and he has some trouble getting around. On Monday, though, after he closed on his very first home, Campbell was doing cartwheels inside, his daughter said.

“Your own is your own,” said a satisfied Campbell, a native of Jamaica, who with his wife, Hermine, will move into their Miramar townhome in about a month. “I want something for myself. I don’t like to pay other people’s mortgages.”

After more than a year of looking with help from his daughter, Joan Grant, Campbell found the perfect home – a three-bedroom foreclosure about five minutes from family who will be able to keep closer watch on the elderly couple.

The closing price: $71,425 – minus the $8,000 first-time home buyer federal tax credit, of course.

Campbell’s monthly payments, including taxes and insurance, are about $550, an amount he can comfortably cover with Social Security, retirement savings and income from a rental property owned by his wife.

The couple will have to invest in a new air conditioner and replace the windows, but otherwise the property is in decent condition, said Campbell, who retired two years ago as a Publix clerk in Southwest Miami-Dade.

This is Campbell’s first home purchase, but his wife owned the home where the couple used to live.

As South Florida home prices continue sinking, buyers like Campbell are wading into a market offering the most affordable home prices in at least a decade.

Not since 1998 have houses been this cheap relative to family income in Miami-Dade County. In Broward, homes haven’t been as affordable since 1994, according to Moody’s Economy.com.

The new low-priced reality means many buyers can own for much less than it costs to rent, even before taking into account income tax deductions for mortgage interest, mortgage insurance and property taxes. As recent sales figures reflect, many are jumping at the opportunity.

Campbell, for one, said he didn’t think he could rent a three-bedroom, two-bathroom home in a similar subdivision for $550 a month. The home is about 1,300 square feet and has a one-car garage and a small yard.

“Housing affordability has increased so that the family earning the median family income can afford more than the median priced home in Miami-Dade, Broward and Palm Beach,” said Chris Lafakis, an economist with Moody’s who tracks Florida and South Florida.

Moody’s uses a proprietary index that factors in home prices, income and other financial variables like regional mortgage rates to gauge affordability.

An index value of 100 means a family of four earning the median income can afford to buy the median priced home. During the heyday of the housing boom as prices soared, the index plunged to an all-time low of 49 in Miami-Dade at the end of 2005, indicating the average family could scarcely afford half the price of a middling home.

In Broward, the record low of 63 occurred about the same time.

Since then, tumbling values have brought home ownership comfortably within reach of individuals such as Campbell.

At the end of the second quarter, the index, which excludes condominiums, hit 126 in Miami-Dade and 159 in Broward. This means a family earning the median income can afford to buy a home for 26 percent above the median price in Miami-Dade and a full 59 percent above the median price in Broward, giving them ample options.

At the end of the second quarter, the median home price was $195,000 in Miami-Dade and $195,500 in Broward, down 35 percent from the same quarter the year before, according to the Florida Association of Realtors.

There is currently a vast supply of homes listed below those prices.

Second-quarter median income statistics aren’t available yet, but at the end of March, the median income for a family of four in Miami-Dade was $50,150, and in Broward, $63,100.

While the low prices have spurred a flurry of new buying, the dramatic increase in affordability has not boosted sales to a corresponding level.

The reasons for that are tighter mortgage underwriting standards that are making it difficult for borrowers to qualify for financing. Despite his ability to put down 20 percent, Campbell said he had to jump through numerous hoops before lenders would qualify him.

Concerns that prices still have further to fall are also dampening demand.

“It’s a deflationary psychology that is self-reinforcing,” Lafakis said. “Home buyers expect house prices to fall, so they don’t buy. Then, because nobody is buying houses, prices do fall.”

Nonetheless, Marcia Pennant, Campbell’s real estate agent and a broker with Coldwell Banker’s Cooper City office, said new home buyers are motivated by the low prices, the tax credit and low interest rates.

“There are definitely more buyers at this time – the bank-owned properties are cheaper, the short-sales make them cheaper. That creates multiple offers in some situations on these homes,” Pennant said. “Some homes have more than one offer and sometimes as many as 20.”

As for Campbell, who is leaving his neighborhood of the past 17 years, he will miss visiting friends at the nearby Publix, where he worked for 17 years.

And then, there is his gardening.

“I am going to miss the ackee plants and banana trees and all those trees I planted from scratch,” Campbell said.

But he’s looking forward to his new backyard.


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