Can You Afford a North Florida Home Loan?
Recently a hot bed for Florida investment loans, the area of North Florida is now concerned about the affordability of mortgages for potential home buyers. Industry officials from Tallahasee are worried about a report by a federal bank-oversight agency that showed a large drop in the number of households able to afford a median-priced home in the state.
“I think there is a huge risk to the economy of Florida,” said Mike Fields, president of Bank of America’s Tallahassee operation, “because the inability to provide adequate workforce housing has the potential to take the wheels of Florida’s economic engine.”
Fields made his comment after the Federal Deposit Insurance Corp., which insures all nationally chartered banks, released a report Tuesday showing a drastic drop in the number of Florida families able to afford median-priced homes.
The change in affordability of a Florida home loan
The report said 69 percent of all state households could afford a median-priced home under normal mortgage guidelines in 1999, when the median price was $95,000.
By 2005, that number had dropped to 33 percent and the median price was up to $259,083. (Median price is the point where half the homes sold cost more and half cost less.) Therefore, the averager person who wishes to take out a Florida home loan would need to earn at least $60,476 annually in order to buy a home at the 2005 median price, according to the report.
Last year, Tallahassee’s median income was $49,359, according to the U.S. Census Bureau, while the median home sale price was $205,000.
Fields said a concerted effort by everyone involved in the real-estate sector - builders, cities counties, loan officers and the state - will be needed to help keep what he calls “workforce” housing within reach of Florida families.
“My bank tellers can’t afford to drive 100 miles to work,” he said, referring to less-expensive housing that is being built in counties around Tallahassee because of lower land prices. This follows the recent problem of housing affordability in the area.
But spending less money to live farther away isn’t always the answer, said Mary Estes, the chief operating officer of Florida Commerce Credit Union.
“Buying a cheaper house in Wakulla (County)” to avoid higher Tallahassee prices “doesn’t mean you are winning,” Estes said, noting the cost of long-term transportation.
The FDIC report also noted energy costs for Floridians was about $2,000 per capita in 2005. That means a family of four spent about $8,000 annually to cover the cost of driving, heating and cooling a home and other energy-related expenses. With this in mind, it may be worth considering green mortgages.
Estes said one solution could involve incentives for builders that might include lower taxes, quicker permitting processes and other enticements to get the less expensive homes built.
Marty Stubblefield, president of Hancock Bank of Florida, said he did not think the situation had reached “critical mass” yet, but agreed it needed to be addressed soon.
“The concern is where is the (less expensive) house going to come from,” he said. “Where is the home for the $40,000 family?”
Meanwhile, Chris Jensen, president of Regions Bank, which opened its first office in Tallahassee in March 2005, called the declining number of families able to purchase homes “alarming.”
He said he had faith that builders and lenders could find ways to dampen the effect of the rising prices, but added “it’s getting harder and more difficult” to keep housing affordable.
This is an issue affecting North Florida and those seeking South Florida home loans, as well. As insiders become more aware of it, however, there’s hope that the affordability issues will be promptly dealt with.
