Study Shows 90 Percent of Palm Beach Residents Can’t Afford County’s Housing
In the latest alarming affordable housing story to come out of South Florida, Palm Beach County’s Housing Leadership Council says that 90 percent of the county’s residents cannot afford a home at the current median price.
The new group, formed by the Economic Council of Palm Beach County to document the housing affordability crisis and find options to solve it, unveiled results of an in-depth study of the county’s housing stock and workforce, reports the Palm Beach Post.
Local home prices have shot up so much faster than wages that there’s an astonishing $209,471 difference between what homes in Palm Beach County cost and what the typical household can afford to pay, said Ned Murray, Associate Director of The Metropolitan Center at Florida International University in Miami, which conducted the study.
Some of the findings:
- The median income for all Palm Beach County occupations is just $27,851.
- Median household income is relatively low, the study shows, at $52,825.
- Low wages are due to the nature of the county’s employment, with 87 percent of all jobs falling in the relatively low-paying service sector.
- Meanwhile, the median price of a single-family home in the first quarter of this year was $392,900, according to the Florida Association of Realtors.
- To reasonably afford a Florida home loan and make payments on such a property would require income of at least $130,000.
“We wanted to study the workforce — who they are and what their needs are — before we try to come up with solutions,” said Mike Jones, President and CEO of the Economic Council.
The council is comprised of a group of influential business leaders that aims to be a catalyst between the public and private sectors for action on civic issues. This report includes comprehensive housing and workforce information broken down by municipality, which sets it apart from the studies Florida counties have recently conducted to address housing affordability concerns.
The second phase of the Housing Leadership Council’s agenda will examine 20 or so options that other communities have used to improve the supply of affordable housing. The options will then be prioritized, Jones told the Post.
Similar to what the Broward County housing market is facing, the Palm Beach affordability crisis has been intensified thanks to three major factors:
- A growing shortage of affordable homes
- An increasing home value-to-income ratio, which has risen to seven times the typical worker’s pay, up from five times just two years ago
- A pattern of constant development that has produced a mismatch in the price of homes built and the housing demands of the workforce
“When you see a home price-to-wage ratio of 7:1, there’s a limit to what you can do,” said Dennis Grady, president of the Chamber of Commerce of the Palm Beaches, a founding member of the Housing Leadership Council.
The ideal ratio is 2:1, Murray said. The shortage of affordable homes has been hastened by the condo conversion craze, which has removed at least 13,000 rental units. The for-sale units that replaced them always cost more, pricing renters out of the Palm Beach County market, and causing existing rental costs to rise 52 percent since 2001.
The obvious solution would be raising wages, but that is impractical, if not impossible, business leaders say.
Raising wages across the board might not be popular with employers, but some employers are recognizing the problem of keeping people in the area, and offering salary, benefits and other incentives to get the workers they need. Nearly 70 percent of the major employers in Palm Beach County told the Council that the lack of affordable housing has caused them difficulty in hiring and retaining employees.
It may be paradise, but the Palm Beach County housing market has gotten so expensive it’s pushed out 90 percent of the people who clean the house, ring up your new shoes, care for you after surgery, wash your car, fix your air conditioner, and so on. Even teaching jobs and other sought-after professions aren’t doing the trick. Jennifer Vacco, HR Manager for Lockheed Martin, has hired nearly 200 people in the past 18 months, but can’t stop thinking about the people that got away.
“Every time, it was the cost of housing. And these were professional jobs paying $70,000 a year,” she said.
Kristin Garrison, planning department director for the Palm Beach County School District, loses 20 percent of the teachers her recruiters lure in because they can’t find homes they can afford. Geralyn Lunsford, V.P. for patient services at Bethesda Memorial Hospital in Boynton Beach, has observed a marked increase in nurse turnover over two years.
“I’ve got a 35 percent increase in turnover due to relocations to Georgia, North Carolina and Tennessee, places where housing is more affordable. It’s a grave concern,” Lunsford said.
“It’s very difficult to work with businesses and hear their needs and try to fill them with qualified job seekers,” said Kathryn Schmidt, President and CEO of Workforce Alliance in W. Palm Beach, who agonizes over how to help companies find workers because she knows prices are insurmountable.
Enter the Housing Leadership Council. The study is designed to establish a baseline so officials can see if individual cities are losing ground on affordability or making gains. The next order of business is to rank the proposed solutions to the affordability crisis. Members hope to partner with government and private industry to implement solutions to this South Florida real estate problem.
Hopefully, this collaboration of ideas will result in a solution, so that affordable Florida home loans and real estate remain attainable for all.
