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Monday, December 13, 2021
Florida Continues to Struggle with Affordable Housing
By Mary Ellen Klas
A new report from Apartment List finds Florida leads the nation in the percentage of renters (56%) who have to spend 30% or more of their income on housing.
MIAMI – The panel of academics and housing professionals assembled before the Florida Senate committee last week delivered a unified message: Florida is in the throes of an affordable housing crisis and more money is needed to keep the economy humming.
Fueled by taxes on soaring real estate values, Gov. Ron DeSantis on Thursday found $144 million more than he had last year in the state account and proposed $355 million in affordable housing initiatives as part of his $99.7 billion budget proposal. If legislators approve, it will mean the state would spend more than the $209 million they dedicated to workforce and low-income housing this budget year. And it could mean the largest amount spent on the issue in more than a decade.
For many Floridians still recovering from pandemic-imposed unemployment, eviction notices and unpaid rent, the heavy investment couldn’t come at a more important time.
According to a new research report by Apartment List, a rental listing company, Florida leads the nation in housing unaffordability with the percentage of renters – 56.5 % – who spend 30% or more of their income on housing.
The high cost-burden rate is worse in the state’s major metropolitan areas. For example, 62.7% of renters in Miami are spending half of their income or more on housing, the highest percentage of the nation’s 100 largest metro areas, the report found.
Tampa led the nation, along with Phoenix and Las Vegas, with highest rent increases in the last year, climbing by 34% or more since the start of the pandemic.
In these Sun Belt markets, “the pandemic did not start a new trend, so much as accelerate an existing one,” the November report stated. “Affordability here was waning even before the pandemic ignited a rush of new rental demand.”
Data tells the tale
Economists and housing experts from Florida International University’s Metropolitan Center and the University of Florida’s Shimberg Center for Housing Studies assembled by the Senate Community Affairs Committee provided data and details to explain why this matters.
Most workers in Florida can’t afford to rent a typical two-bedroom apartment, said Ned Murray, associate director of the Florida International University Metropolitan Center. A full-time worker would need to earn $24.43 an hour to pay the typical rent of $1,270 a month, but the median wage in Florida is $17.26 an hour, he said.
In many parts of the state, the situation is even worse. In Miami Dade County, the median renter income is about $35,000 and the average rent is over $3,000. “You can do the math,” he said.
Murray cautioned legislators to stop talking about Florida’s economic development strategic plan and labor shortages without addressing affordable housing. He pointed to Monroe County, which in 2007 faced a worker shortage and a stagnant economy because of its lack of affordable housing units.
“When you’re paying 50 cents or more on every dollar for rent...it means you get up and leave because your quality of life is gone,” he said. “If you’re trying to feed your children, clothe them, buy medicine, if you’re paying that amount of money on rent, or housing cost in general, you have very, very little residual income left.”
William O’Dell, director of the Shimberg Center, said that the housing costs are also pricing many people out of the market. The median home price in Florida peaked in 2006 at about $337,000 and, while prices bottomed out during the Great Recession, they have steadily increased again and are now at just over $300,000, he said.
But as housing costs in Florida have risen, incomes have not, O’Dell said. “We’ve seen a slow but steady increase in the proportion of higher income households becoming cost burdened.”
Now, as real estate values appreciate, the state is losing hundreds of thousands of affordable housing units exactly at a time when it needs them most.
“We’re on a treadmill,” said Murray of FIU. “We’ve got this continuous pressure on the market that’s really created this incredible imbalance. There’s really nothing quite like it in the country.”
Legislature doesn’t have a great track record
The Legislature in 1992 anticipated that with Florida’s growth there would be an increased demand to balance rising real estate costs with the need for workforce housing. It created a dedicated revenue source for affordable housing by putting a portion of the documentary stamp tax on real estate transactions into the William E. Sadowski Affordable Housing Trust Fund.
By 2002, legislators began sweeping money from the fund to pay for other priorities, and Florida’s affordable housing stock declined at the same time real estate costs were rising. After nearly two decades of siphoning housing money, legislators last year announced they would stop the practice. They passed SB 2512, which reduced the amount of money going into the Sadowski fund from 24 cents on the dollar to 9.7 cents and passed a law intended to ban fund sweeps in the future.
If legislators abide by a new law this year, they will have a projected $315 million projected to use from the fund. The governor proposes adding another $40 million to support workforce homeownership, including down payment assistance and closing cost assistance. That money would come from reserves, now available because of the governor’s veto of a previous attempt by legislators to sweep $40 million from the affordable housing trust fund.
“It’s a significant bump, and every penny of it is needed and every penny will be spent and well spent,” said Mark Hendrickson, executive director of the Florida Association of Local Housing Finance Authorities. “There’s more money this year because there’s more real estate transactions and real estate costs more money.”
But will legislators keep their promise to leave the funds alone?
“They’ve made a promise that there are no more sweeps,” Hendrickson said. “We are grateful, and we’re taking them at their word.”
For his part, DeSantis included a fleeting reference to the cost of soaring rents when he made his budget announcement and implied that the federal government ban on evictions was the cause for the rising costs.
“People want to come to Florida, but things are getting more expensive,” he said. “The rents have gone up because of the CDC policy, which was misguided for so long.”
Roots in the recession
But the economists told the Senate committee that Florida’s affordable housing crisis has been building since the Great Recession.
“Up until about 2004, we were relatively affordable and that was one of our competitive advantages,” Murray explained. “We had cheap land and relatively affordable housing. That’s no longer the case. We are now one of the most unaffordable states in certain metropolitan areas.”
What’s worse, he said, the problem is not unique to South Florida, Orlando or Tampa/St. Petersburg. It is also affecting businesses trying to attract workers in places like Fort Myers and Jacksonville.
“Just like the economic shock of the pandemic was unprecedented … the housing market boom that we’re seeing right now, is unprecedented as well,” he said.
O’Dell of the University of Florida summed it up for the Senate committee: “Invariably, you’re going to have to spend more money on this issue to begin to solve it throughout the state of Florida.”
Will a $355 million investment make a difference?
“It will make a difference,” Hendrickson said. “I don’t think it ends it.”