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In
order to most accurately determine prior market price cycles one must remove the effects of inflation and look at real historical prices. The past thirty years have seen three real price cycles in Miami. However, the current growth cycle should be viewed as two separate cycles; one cycle which involved marginal real growth from 1987 - 2000 (13 years for a total of $21.1K) and the other cycle which involved extremely rapid real price growth from 2001 - 2006 (5 years for a total of $188.7K). Market cycle time periods have varied from a market downturn of seven years to the current market growth cycle of nearly twenty years.
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|
Time
Period |
Real
Price History |
Real
Price Change |
Nominal
Price History |
Nominal
Price Change |
1976:Q1
- 1980:Q1 |
$132,600
- $162,200 |
22.3% |
$38,200
- $63,900 |
67.3% |
1980:Q1
- 1987:Q1 |
$162,200
- $134,600 |
-17.0% |
$63,900
- $74,900 |
17.2% |
1987:Q1
- 2006:Q4 |
$134,600
- $366,800 |
172.6% |
$74,900
- $366,800 |
389.6% |
The
mortgage-debt-to-income ratio is commonly viewed as the most accurate method of determining market cycles. The past thirty years have seen three cycles and the beginning of a fourth, all of which included large changes in home affordability. The peak in 1982 is an abnormality due to all time high mortgage rates. It does however act as the turning point of a nearly 18 year improvement in Miami home affordability. However, the recent rapid deterioration of home affordability and very low historical mortgage rates means today’s Miami home prices have an extremely high mortgage rate fluctuation risk.
|
Time
Period |
Miami
Mortgage-Debt-to-Income Ratio |
Miami
Ratio Change |
National
Mortgage-Debt-to-Income Ratio |
National
Ratio Change |
1976:Q1
- 1982:Q1 |
22.7%
- 51.7% |
127.8% |
20.1%
- 38.6% |
91.9% |
1982:Q1
- 1998:Q4 |
51.7%
- 17.6% |
-65.9% |
38.6%
- 15.9% |
-58.8% |
1998:Q4
- 2006:Q3 |
17.6%
- 40.3% |
128.7% |
15.9%
- 23.3% |
46.8% |
2006:Q3
- 2006:Q4 |
40.3%
- 38.8% |
-3.8% |
23.3%
- 21.7% |
-6.8% |
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