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Sunday, November 26, 2006

Affordable housing? Where?

Middle- and working-class families feel crunch as costs rise

Stephen D. Price
From the FLORIDA CAPITAL BUREAU

Althea Gaines, a paralegal for a Tallahassee law firm, began searching for a house four years ago, but soon became frustrated with the process.

"I came to the conclusion quickly there was little I could afford," said Gaines, 31, a single mother of four. "The market doesn't give you much to work with."

So Gaines turned to an unlikely source for someone in her field for help: Habitat for Humanity.

"If not for the Habitat program, I wouldn't be doing it," she said.

Gaines is not alone.

Even as the market levels off from years of skyrocketing prices, Florida home prices have made the dream of home ownership a challenge for some middle- and working-class families. It's a problem that comes not just from prices and incomes, but is exacerbated by hurricanes and the conversion of rental units to condominiums.

Affordable housing advocates, lawmakers and employers are searching for solutions to a problem that is not limited to individuals who can't afford homeownership. Policymakers address the issue as a threat to the state's economy as well.

In the Big Bend, where the crunch of affordable housing has not been as keenly felt as in South Florida where prices shot even higher, home prices still have risen precipitously.

But by some bankers' measures, Tallahassee remains among the state's most affordable housing areas. Affordable-housing advocates, and the experience of residents like Gaines and others, indicate that the area has not been immune from the same forces at work more acutely elsewhere.

Prices rise
According to the Florida Association of Realtors, the median price for an existing house in Tallahassee rose from $129,700 in 2001, to $185,000 in September.

Between 2002 and 2005, the statewide median family income rose from $51,800 to $52,550, while the median existing home price jumped from $137,800 to $235,100, according to information from the Florida Association of Realtors and the U.S. Department of Housing and Urban Development.

Affordable housing is defined by the U.S. Census Bureau as spending no more than 30 percent of annual household income on housing costs.

A recent federal study showed only 33 percent of Florida families could afford to purchase a median-priced home in Florida using a conventional mortgage, compared to 70 percent in 1999. Rising property-tax rates and property insurance haven't helped the equation.

The affordable-housing shortage became so pervasive that the Legislature formed an affordable-housing workgroup to figure out ways to make homes more affordable.

"I think the problem sneaked up on a lot of us," said state Rep. Mike Davis, R-Naples, who chairs the workgroup and sponsored an affordable-housing bill last session.

Don Upton, president of Fairfield Index, a consulting firm based in Tampa, said affordable housing in Florida "is becoming a problem for growth and diversity no matter what county you live in."

To help, last year the Tallahassee City Commission passed an inclusionary housing ordinance, which mandates that developments of 50 or more units in the more expensive parts of town, price 10 percent of the units just below $160,000.

Dave Wamsley, owner of K2 Urbancorp, is constructing the first housing development to conform to the city's new ordinance, the 99-unit Evening Rose project, and said the ordinance is a good idea.

"It's a start," Wamsley said. "If every developer doing a new project had that as a goal, it will create more product. You're creating housing that meets a demand in the marketplace."

Gregory Miller, chief economist for SunTrust bank based in Atlanta, said Tallahassee is the most affordable place to live in Florida. Miller said statistics compiled by economy.com show a family in Tallahassee can afford to buy a house 35 to 40 percent above the median-priced home.

Poor are affected
The issue has strapped Florida households across the economic spectrum.

"There has always been an affordable housing problem, but that problem was concentrated on the low, low-income people," said Mark Hendrickson, an affordable-housing consultant. "It's not going back down. Florida had undervalued real estate. You can't have all this land around water and keep Alabama housing prices. We have a train wreck coming. It's going to hurt the economy of the state and the citizens."

Many also blame the recent hurricanes for driving up prices of building materials and that being passed along to homebuyers.

Florida outpaces other states in home costs. The American Dream Coalition said a new four-bedroom home in Austin, Texas, would cost about $200,000. That same home would cost $300,000 in Tallahassee; $350,000 in Daytona and $400,000 in Fort Lauderdale.

How to fix it?
The affordable-housing issue has many state leaders, private and public, scrambling to find ways to help working- and middle-class families buy homes.

Solutions vary, from employers buying land for work-force housing to prospective homebuyers receiving government help with down payments.

During the last legislative session, lawmakers approved an affordable-housing bill that will provide $516 million for programs for the working poor, middle-income residents and those affected by hurricanes, to help find homes they can afford.

The bill includes $8 million for homeless people; $30 million for working poor Floridians and $50 million to help middle-income workers such as teachers, nurses and police officers find housing in the same communities where they work.

But some families have had to try a different approach.

Tallahassee Habitat for Humanity Executive Director Lou Armesto said his group, which provides zero-interest loans to families in need to build houses, serves not only low-income families but now also families with occupations such as nurses, supervisors and firefighters.

The profile of the Habitat homeowner is changing, to the point that 30 percent to 40 percent of families working with the group are college educated, she said. The Tallahassee Habitat for Humanity board decided in February to increase the minimum guideline for income requirements, meaning to qualify for the program families must earn 40 percent to 60 percent of the area median income, instead of 30 percent to 60 percent.

"That tells you there are a lot of desperate people out there getting squeezed out of the housing market," Armesto said. "We'd love to help everybody, but we aren't doing anyone a favor putting them in a house they can't afford."

Armesto said families who met the former minimum guidelines had trouble paying rising property taxes a year later.

Not just in Tallahassee Elsewhere in Florida, similar struggles show up. In Lee County last year, more than a dozen teachers quit their jobs with the county school district before the school year began.

With the county's average starting teacher salary of $36,000, they would come up short in buying a house in the county where the median home price last August was $264,100, according to the Florida Association of Realtors.

School officials weren't surprised.

"It's not just teachers. It's police officers, firefighters, 911 operators," said Joe Donzelli, spokesman for Lee County Schools. "There are many places in this state where people who run the county can't afford to live in the county."

Lee County Schools officials are scouting land owned by the district to possibly build work-force-assisted housing, Donzelli said. "It's gotten to the point where we have had to look at those solutions," Donzelli said.

Few are exempt from the issue, even those earning six figures.

John Zumwalt, chairman and CEO of the engineering firm, PBS&J based in Tampa, said he didn't think it would be a problem finding housing for the company's new chief financial officer who moved from Omaha, Neb., with a salary of $250,000. The CFO's house in Omaha cost $300,000, and Zumwalt figured he would find the equivalent in Tampa for $500,000.

He was surprised to learn the equivalent house cost $750,000.

"Those are the things we're running into," said Zumwalt, who is also chair of the Florida Chamber Foundation, which put on an affordable-housing summit earlier this year in Tampa. "It will take a while to solve the problem."

Repeal the cap Housing advocates say solutions begin with repealing the cap in place on the affordable-housing trust fund. The state's traditional housing programs have their funding capped at $243 million a year.

"Our needs are twice what the cap is," said Jaimie Ross, president of the Florida Affordable Housing Coalition.

The median sales price for an existing house in Florida declined slightly in September at $243,900, compared to $246,100 in September 2005, a sign that the market may be correcting, some officials say.

But what the future holds for housing depends on who you ask.

Ross said the level of appreciation the next few years will not be as high as the last few years.

"But we are not going to see houses become affordable," she said.

Things will get better in the next year, Davis said, but five years from now that could change.

"We have a lot of baby boomers with money who may soon move to Florida and that will drive the costs up," Davis said. "I'm optimistic we will make it better, but I think Florida will always have an affordable-housing problem to some degree."