"Perfect Storm" Created Affordable Housing Crisis; Combination of Measures Can Solve it

There is no single answer to the greatest problem facing the Southwest Florida housing market, but a matrix of measures to ease the crisis.

Yes, affordable housing is an issue that broods below the underbelly of the “development curve” until it surfaces suddenly as a massive problem.

Charlotte County reached that point in 2005, when a rapidly appreciating real estate market fostered dramatic spikes in property values, making home ownership untenable for those with median incomes.

The land boom exacerbated a rental shortage created when Hurricane Charley damaged or destroyed 2,380 apartment units — 23.5 percent of the county’s rental stock.

It was a perfect storm of social, economic, geographic, demographic and circumstantial elements conspiring to create a housing crunch.

A cooling Florida real estate landscape and the slow, but steady, restoration of the area’s rental stock has alleviated some pressure in the last year.

Many see the slowing “development curve” as an opportunity for state and local governments to adopt incentives to make affordable housing initiatives more profitable to finance and build. But how much influence can government have in a U.S. economy where land — and land-use — are supply and demand commodities?

The answer: There is no answer.

There are, however, a collection of measures that could help ease the next Florida housing crisis. Affordable housing is defined as no more than 30 percent of a family’s or individual’s monthly income spent on rent or Florida home mortgage payments.

In Charlotte County, median annual income is $36,100 for a single person; $41,300 for a two-person family; $50,400 for a family of four. The average home in Englewood, Fla., cost $141,000. In 2005, it was $250,000, making for an awfully steep Florida mortgage payment plan.

A four-person family with a $50,400 county median income would qualify for a $230,000 home with a $1,500 monthly home loan at 6.75 percent interest. Factor in skyrocketing taxes and property insurance and that $1,500 monthly Florida mortgage is nearly $2,000, Diedrick said.

Now, that family of four with a $50,400 median income needs to earn $64,000 a year to qualify for a home $20,000 below the average price. The pattern is same elsewhere. In fact, housing is an issue in recruiting teachers, nurses and police officers. But help is available.

Brenda Bala, executive director of Charlotte County’s Housing Corp., said through the State Housing Initiative Partnership Program, there is money to assist first-time home buyers who earn up to 120 percent of the county’s median income.

While these initiatives are part of the solution, they don’t address the rental scarcity. The Charlotte County Human Services Housing Coordinator, Loraine Helber, said there are 475 subsidized multi-family homes being built or approved in the county.

But there are no new affordable housing projects on the horizon, she said.

“Multifamily development isn’t easy in Charlotte County,” Helber said.

Plat maps explain why: Much of the county is subdivided into 200,000 same-sized lots. This twists the supply-and-demand formula that dictates how property values and home prices increase as available land decreases.

“We don’t have a shortage of developable land. We are sitting on an excess of 100,000 lots. There is sufficient development approved in Charlotte County for a city the size of Tampa,” County Commissioner Adam Cummings said.

But it’s all the same type of development — single-family homes — with little incentive to vary. The sprawl of single-family lots prompted the county to require an annual 1 percent reduction of its build-out density. Does it work in creating workforce housing? In theory, yes. In reality? Maybe not.

Many see the clashing policies of local governments as an example of how government creates more problems than it solves when it comes to housing affordability.

“Whenever we see housing become unaffordable, are there ways governments cause this situation to come about?” asked State Rep. Paige Kreegel, R-Port Charlotte. “Governments should not be part of the problem, but part of the solution.”

In addition, Kreegel said, impact fees have tripled since June to $3.81 a square foot, while hookup fees have increased by $1,400 to nearly $6,000 per new home. These fees add more than $10,000 to the cost of a each new residential unit.

Every additional $10,000 translates into $25,000-30,000 for the homeowner over time, and that means every $10,000 costs $2,500 more in annual income to qualify for a Florida home loan.

While there will always be pressure to reduce or waive impact fees, many say there are relatively painless ways to promote affordable housing by revising land-use codes. Ideas include smaller lot sizes, building to minimum densities, allowing “mother-in-law” units, inclusionary zoning, land trusts, mixed-use zoning and density bonuses.

There’s another side to the affordable housing issue with equally profound repercussions, and that is the mere perception of affordable housing.

Ultimately, affordability is a function of income, and unless Charlotte County is able to attract higher-paying employers, any changes to zoning and or fees will eventually be negated by land and construction costs, which will only continue to rise.

When the minimum wage was adopted in 1960, it was $1.90 an hour. The cost of living index would make that $12.78 an hour now, he said. Two people each making $12.78 an hour would have — at 30 percent of their income — $1,240 a month for housing. At today’s minimum wage, two working people would have about $500 for housing.

Unless it’s subsidized, there is little housing available for $500 a month anywhere.

It will take a sharp shift in expectations to create a more diverse, cost-friendly housing market. Housing may no longer be what we envisioned housing to be. Not everyone can afford the cute ranch-style house on a quarter-acre lot. The idea that housing can take different forms, such as condos and multi-family homes, must take hold.

After all, says one developer, home ownership is the American Dream — not the American entitlement.