South Florida rated most cash-poor metro in nation
The high cost of living in South Florida leaves people more vulnerable to a financial crisis than anywhere in the country, a new study concludes.
Of the nation's 35 largest metros, the tri-county area has the highest percentage of households that don't have enough cash or other liquid assets to pay for three months of expenses, according to data compiled by the Corporation for Enterprise Development, a non-profit in Washington, D.C., that promotes economic opportunity for families.
Some 48.9 percent of families in Broward, Palm Beach and Miami-Dade counties don't have $5,876 in bank, investment and retirement accounts — the amount the study says even an impoverished family of four needs for three months of expenses.
"Five years into the economic recovery, most American families no longer live in fear of losing their jobs or their homes," the study says. "Yet, these families continue to exist in a state of persistent financial insecurity, making it difficult to look beyond immediate needs and plan for a more secure future."
Nearly half of South Floridians stand one financial emergency away from poverty, researchers concluded, based on census data.
Many families take home $50,000 to $75,000 a year — well above South Florida's $46,946 median income — but they have little to no savings, said Lebaron Sims, research manager for the Corporation for Enterprise Development, which partnered with nonprofits Citi Community Development and Catalyst Miami to conduct the study.
The cost of living in South Florida consumes their paychecks, he said. "It's just not the people on the fringes. It's your neighbors," Sims said.
Miami-Dade families face the toughest challenge, Nearly six of 10 households in the county are cash poor, the report found.
Housing costs prevent many people from building cash reserves, Sims said.
The cost of housing in South Florida averages $16,212 annually, accounting for nearly 40 percent of an average household's expenses, compared with 33.2 percent nationally, according to the U.S. Bureau of Labor Statistics.
Sarah Nunez, a Hair Cuttery hairdresser in Southwest Ranches, says she can't afford to live near her job. So she lives in a two-bedroom, one-bath apartment in Hialeah with her daughter and parents. Her rent in the past two years has risen $200 to $1,050 a month, Nunez said.
Higher costs mean she has to go without to pay her bills. The single mom would like, for example, to buy a $40 pair of shoes for work, but "I can't even afford them." She said she recently had to borrow money to pay living expenses, promising to pay friends back when she gets her income tax refund. "It's crazy," she said.
The housing bust in South Florida created economic stress not just for owners forced out of homes but for all renters who face rising rent, researcher Sims said.
Apartment rents in the West Palm Beach area rose 9.1 percent in November from the year before, according to Axiometrics, a rental housing analyst in Dallas. Rents in the Fort Lauderdale area rose 6.1 percent. Both surpassed the national average of 4.7 percent, Axiometrics said in a study released Tuesday.
Landlords are able to raise rents easily because rental units are in high demand, said Axiometrics spokesman Ross Coulter. Apartments in both counties are about 95 percent full, he said.
Greg Goodman of Delray Beach said he sold his condo unit at a loss last year and ended up renting — only to find his complex wanted to raise his monthly rent this year by $200. "I said you've got to be kidding me," said Goodman, a communications manager. He said he negotiated an increase of less than half what the complex originally asked for.
He said he still must watch his expenses closely.
Overall, inflation here runs ahead of the nation's. South Florida's consumer price index for all urban consumers increased 2.2 percent in October from a year ago, compared with the nation's 1.7 percent rise for the same period, according to the latest statistics from the U.S. Bureau of Labor Statistics.