South Florida Sun-Sentinel (Sunday)
South Florida’s affordability crisis getting worse
The housing crisis in South Florida has only grown worse over the past decade, and with most fixes taking years to implement, the lack of affordability could lead to negative effects on South Florida’s economy.
It’s a tale of ups and downs. During the real estate boom of 2005, affordability, defined as how much housing costs relative to income, in South Florida plummeted as housing prices rose, according to data from ATTOM Data, a provider of nationwide property data. After the housing crash, prices became more affordable before beginning to take a turn for the worse in 2012, growing steadily worse until now.
The graph below measures affordability in South Florida dating back to 2005. A number below 100 represents increasing unaffordability compared to historic averages, while numbers above 100 represent more affordable years relative to wages.
“For [the] majority of our working population, housing has never been affordable,” said Suzanne Cabrera with the Housing Leadership Council of Palm Beach County.
Addressing the issues causing affordability problems would take years, experts say, and they vary on how to fix the crisis in South Florida. Most agree, though, that there are a few key elements fueling the affordability crisis.
The main driver is a lack of overall supply in the market, followed by the forces that make it difficult to build more units in our area: lack of land, zoning policies, the permitting process, impact fees and overall funding for affordable housing.
“From a big picture perspective, the only way to solve the affordability crisis in South Florida is to have more supply,” said Albert Milo, President of Related Urban Development Group. “You need to be able to produce more units on an annual basis at a certain price point that can serve the different income levels that are finding it very hard to find housing that is affordable to them.”
The Related Urban Development Group currently has between 6,000 and 7,000 affordable units in the pipeline for development in the South Florida area.
But building housing, let alone affordable housing, isn’t easy in South Florida. For Milo, a big hurdle is the lack of as of right zoning in some areas of South Florida. As of right zoning allows development of land without any extra conditions or approvals from government authorities.
Milo sees this as a benefit as it allows developers to bypass a long planning approval process and public hearings that help determine what they can to build on a piece of land.
“[The lack of as of right zoning] dissuades developers from even trying to build even more affordable housing, because it takes a year and a half, and several hundred thousands of dollars,” Milo said. “You are going to be more inclined to put that towards a project that is going to give you better financial return.”
The overall expense of building is also high, as lumber costs are on the rise. The permitting process and impact fees also make it harder for developers to build affordable units and still turn a profit.
“Those are heavy numbers and they are the same for us building an affordable unit as they are for a market rate unit,” said Mandy Bartle, executive director of the South Florida Community Land Trust, a non-profit corporation aimed at preserving affordable housing. “It could be that we need to encourage local government to find ways to subsidize waivers if it’s affordable. Maybe looking at deferring those fees if it is affordable. “
In the meantime, South Florida runs the risk of eroding its middle class, the loss of which would cause drastic effects to the region’s economy. Emerging data indicates that high housing costs are impacting the work force in South Florida, according to Dr. Edward Murray, associate director of the Jorge M. Perez Metropolitan Center at Florida International University.
“We are having companies saying there is not enough housing to bring my workers down here,” Cabrera said.
In Palm Beach County, the labor force has a deficit of 5,949 workers. For Broward County, the labor force is down by 12,685 workers and in Miami Dade County, there is a gap of 74,883 workers. But other counties in the state of Florida are gaining workers; Pinellas County gained 19,982 workers since February of last year and Lee County gained of 1,397.
Experts attribute this to the rising cost of housing in South Florida pushing out the labor force to areas that have a more affordable cost of living.
“People can only hang on for so long,” added Murray.
Courtney Walter, a renter in Pompano Beach, has been having conversations with family about whether it is time for her to leave South Florida for some place where housing prices are cheaper. She’s been here for 21 years, and has only seen housing affordability get worse and worse. The house she is currently renting is being sold, and she needs to find a place to move to by February.
Like many people in South Florida, she’s dealing with being out-priced in the area she’s called home for years.
“It’s heart breaking,” Walter said.
When she first moved to the area, she rented a condo by the beach with her sister for $1,000 a month. Now, prices for apartments have soared so high, she would have to devote at least 50% of her income to rent.
“I’ve become a homebody,” she said. “I have to save my money for things like rent, utilities.”