Not a Sunny Outlook For Southwest Florida

According to an editorial in the Sarasota Herald-Tribune, the rising cost of living in Florida’s counties along the Gulf of Mexico keeps some people away and pushes other people out.

The crux of the problem? The cost of buying a home.

That, apparently, is why roughly 500 fewer young families than expected moved to Sarasota County in the past year. School officials projected a student enrollment increase of 1,600, but due to the increasing affordable housing problem, the district grew by only 461.

The median price of a home in Sarasota County in May was $322,600, the Florida Association of Realtors says. That’s up nearly 100 percent from 2002, when the median-priced home cost $166,500.

Meanwhile, there are many middle-income, middle-aged people who talk about moving away. Even some people who bought homes when they were affordable are finding it hard to stay afloat. Hurricane coverage has suddenly made insurance expensive — when it’s even attainable, that is.

Monthly payments on interest-only Florida home loans are rising, and those with variable-rate mortgages are feeling the heat. Many feel the region is becoming a place of wealthy people and poor people, and that anyone in the middle could slip downward.

That’s surely a fear for some people who work in the construction and real estate industries. The boom times of the past few years appear over, and it’s not clear what the future holds. A market slowdown in those fields will ripple through the local economy.

But in the current Southwest Florida real estate market, it’s not easy for a middle-income person to sell and get out. There are hundreds of new, unoccupied condos and houses owned by speculators, so the market is flooded. People thus wait, watch and wonder whether they should stay.

What unfolds here will depend, to a great extent, on the economy of the state and nation. And there’s not a lot of sunshine in the picture that emerges from several recent reports.

“Among this country’s strong economic expansion, many Americans simply aren’t feeling the benefits,” said Henry Paulson, the Bush administration’s new Treasury Secretary.

Health care and energy costs are a burden for many middle-income people, and Paulson noted the growing disparity between rich and poor as one of the four biggest long-term economic challenges the country faces. Productivity per worker has substantially increased in recent years, but hourly wages have not.

The financial rewards of this increased productivity are going to people who are already well off. Meanwhile, a recent poll by the Pew Research Center found a significant decrease in the number of people who said they made progress over the last five years. They aren’t wrong.

An analysis of Labor Department statistics by the Economic Policy Institute found that real hourly pay of the median worker has fallen about 2 percent since 2003. The decline has been about 4 percent for people in the upper-middle and near the bottom of the wage distribution scale.

• Median household income, adjusted for inflation, fell five years in a row, and was 4 percent lower in 2004 than in 1999. The median is now $44,389.
• Meanwhile, “More and more people are deeper and deeper in debt,” according to the EPI report by Lawrence Mishel and Ross Eisenbrey.
• Per household, debt has risen 42 percent over the past five years.

Obviously, some people borrow to maintain a middle-class standard of living — which can be difficult in a place where the costs of homeownership are high and there’s hardly an abundance of good-paying jobs. The University of Florida’s Bureau of Economic Statistics reported that the state suffers from “low and declining job quality.”

A state with a tax system that puts such a heavy burden on newcomers isn’t laying the welcome mat out for young, middle-income families, and a place where there are few good-paying jobs and high costs associated with home ownership isn’t likely to hold onto a struggling middle class. The state and its local governments need to take action, and fast.