Group Title: Affordable housing issues
Title: Affordable housing issues ; vol. 11 no. 4
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Title: Affordable housing issues ; vol. 11 no. 4
Series Title: Affordable housing issues
Physical Description: Serial
Language: English
Creator: Shimberg Center for Affordable Housing
Publisher: Shimberg Center for Affordable Housing
Place of Publication: Gainesville, Fla.
Publication Date: June 2000
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Bibliographic ID: UF00087009
Volume ID: VID00009
Source Institution: University of Florida
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AF F O RD A B L E


HO USING


I SS


E


S


M.E. Rinker, Sr., School of Building Construction College of Architecture PO Box 115703, University of Florida, Gainesville, FL
32611-5703 TEL: (352) 392-7697 SUNCOM: 622-7697 FAX: (352) 392-4364 e-mail: AFFHSNG@NERVM.NERDC.UFL.EDU


Volume XI, Number 3


June 2000


The Stt of Foia s Ho sig200


Introduction
Florida is a state of contrasts, and those con-
trasts are no where more apparent than in hous-
ing. The population of the state is growing, cre-
ating a demand for additional housing, yet that
growth is not distributed uniformly across the
state. In addition, growth is not distributed evenly
across age categories, and the age structure of the
population has implications for the type of hous-
ing needed. A majority of households are
homeowners, but rental housing is needed to meet
the needs of young and lower income households.
It is a state in which single family housing units
dominate, but condominiums are an important
source of housing in some coastal counties and
mobile homes play a key role in rural counties in
the interior of the state. Housing prices have been
increasing in the state, but not as much as might
be expected. Affordability indices indicate that
housing in the state is affordable, but the indices
mask affordability problems for those in lower
income categories. Finally, it is a state in which
much housing has been built in recent years but
the aging of portions of the stock require atten-
tion to the need for rehabilitation.


1 Partial support for the preparation of this report was provided by the Florida
Association of Realtors.


This document summarizes a larger report
called The State ofFlorida's Housing. It first dis-
cusses demographic patterns in the state and the
need for housing. Second, it details characteris-
tics of the housing stock in the state. Third, it dis-
cusses the movement in house prices and the rate
of appreciation in housing. Finally, it discusses
issues in the affordability of housing in the state.

Changing Character of
Households
Households are virtually the same thing as oc-
cupied housing units. When looking at house-
holds and household formation rates, we are ac-

State of Florida
Population and Household Projections
8,000000 18,000,000
7,000,000 -16,000,000
6,000000- 14,000,000
5,000,000- -12,000,000
S-10,000,000 .
S4,000,000
S-8,000,000
o 3,00000- ,000,000
-6000,0000
2,00000.0- -4000,000
1,000,000- -2,000,000
0 -0
1990 1998 2000 2005 2010
SAll Households 0 Elder Households 0-- Population
75 and over


I








tually looking at housing demand. We project that
by 2010 there will be a little over 7 million house-
holds in Florida. Starting in 2000 and projecting
out to 2010, we see a need for approximately 1
million housing units in order to meet the demo-
graphic demand.
Looking at State of Florida
the charac- Householders by Age -1998
teristics of 75+
the house- 25-34
holds will
give a clue "
about the 65-74
type of hous-
ing that will 35 44
be needed. I
Consider, 55-64 14
first, the age
of the house- 45-54
holds. We
watch the under-35 age group since it represents
those people that are just entering the home buy-
ing market; they make up a large portion of the
first-time homebuyers. Recently, this segment of
the population has been comprised of what some
people refer to as the "Baby Bust" group because
it is relatively small compared to its predecessor,
the Baby Boom group, and it represents the aging
of the babies born during a period of reduced birth
rates. However, coming on the heels of the Baby
Bust is the "Baby Boom Echo", which is a large


population group that is just beginning to enter the
prime household formation age range. We also
watch the households in the over-65 age group. In
1998 about 30 percent of the households in Florida
were in this grouping. Projections for 2000 show
the beginning of the anticipated increase in num-
bers in the under-35 group as well as the contin-
ued growth of the over-65 age groups.
We also look at household income because of its
obvious impact on housing demand. Our num-
bers are based on constant 1990 dollars but we can
adjust to current dollars by multiplying by about
1.5. We find that the largest household income
group lies in the $10,000-$20,000 category. Adjust-
ing to current dollars indicates that the largest
household income group today ranges up to about
$30,000. So, while we have had boom markets and
we know how healthy the housing markets have
been, we continue to have in Florida a substantial
segment of the population that is in the lower in-
come categories. We need to continue to think
about how we can provide housing for these house-
holds.
An important characteristic of households is
their housing tenure owner households and
renter households. Ownership rates are higher in
the older age groups and, of course, in the higher
income groups. Overall, homeownership stands
at about 70 percent in Florida. This percentage is
slightly above the national average that is ap-
proaching 70 percent. Renter households are domi-
nated by the younger age groups and by the lower
income groups. The tenure characteristic indicates
that while we promote homeownership, we also
need to focus house design, location and ameni-
ties on the younger, renter households as that seg-
ment grows over the next decade.
Household size is another important factor that
must be considered when looking at the housing
of the future. Through the mid-1980s there was a
decline in average household size. Historically, we
thought of a household as comprising four persons
(i.e., two adults and two children). This average
has dropped and leveled off just below three per-
sons. Our 1998 data show that the two-person
household was the dominant category in Florida.
This finding is not surprising given Florida's large


1


State of Florida
Household Income 1998
1,400,000-
1,200,000-
S1,000,000
0
S800,000
S600,000,


(N CO 1 L? ? D O C p
o o o o o
N (N `
Income








retired population and the younger population
coming into the state.



I State of Florida


Housing Stock
Florida's housing stock includes single-family
units, multi-family units, and mobile or manufac-
tured units. Although all three types of housing
units are represented, the housing inventory is
dominated by the single-family home. About 60
percent of the state's housing stock is located in
six major metropolitan areas: Fort Lauderdale,
Jacksonville, Miami, Orlando, Tampa-St. Peters-
burg, and West Palm Beach-Boca Raton. Fort Lau-
derdale and Miami, because of their density, also
have the distinction of having the most multi-fam-
ily housing of any other area in the state.
Although not a type of structure, condominium
housing is an important housing category in some
areas of the state. Seventy-eight percent of all con-
dominium housing in the state is located in seven
counties. Broward, Dade, and Palm Beach Coun-
ties alone have 60 percent of the state's condomini-
ums. The other four counties are: Collier, Lee,
Pinellas, and Sarasota. Clearly, condominiums tend
to be a coastal phenomenon. By contrast, mobile or
manufactured housing is largely a rural, inland phe-
nomenon.
Finally, an important characteristic of the exist-
ing housing stock is its age. We examine the ex-
tent to which the age of the stock exceeds 40 years.
The forty-year mark is considered by some as the


age at which rehabilitation and remodeling are
commonly considered. Since much of Florida's
housing stock was built from the 1950s forward,
the housing industry needs to think in terms of
meeting the coming demand for rehabilitation and
remodeling. Jacksonville and Miami are two met-
ropolitan areas with older housing stocks that
need to have serious consideration given to the
rehabilitation market.


Locational Aspects
The macro features of the population movement
in Florida continued a southward shift for a num-
ber of years and then, more recently, has turned
northward. In our work with local jurisdictions,
one of the major concerns, particularly in the
south, is called "build-out." Build-out is the con-
dition where there simply is no more land avail-
able on which to build homes. The shortage of
land also creates concern for the price of the lim-
ited supply. We believe that these concerns are
harbingers of Florida following the national trend
toward a movement to smaller, outlying jurisdic-
tions. Of course, the full impact of this trend will
have to be balanced to some degree by growth
management in the state, any changes that may
be made to the growth management act, and the
effort to encourage higher density development.
Although the state's growth has been concentrated
primarily in and around the six major metropoli-


Metropolitan Statistical Areas


Households by Size 1998


2,500,
2,000,
S1,500,
S1,000,


E Households -0- Percent


Year Structure Built Florida




























tan areas and generally in the southern portion of
the state, we may be seeing other parts of the state
experience more rapid growth. This change is par-
ticularly true for the over-65 group that has come
to Florida to get away from the congestion that is
emerging in Florida's densely populated urban
areas.


Housing Appreciation
Dr. Dean Gatzlaff at Florida State University
prepares the Gatzlaff Index of Housing Prices in
Florida. These indices are calculated for each
Florida's Metropolitan Statistical Areas (MSAs) as
data are available, and use a "repeat sales" meth-
odology to track changes in housing prices over
time.2 For the state, the index has been calculated
from 1980 to 1999 and shows that house prices
have increased over that period from a level of
one in 1980 to 1.73985 in 1999. In other words,
prices in the state have increased by almost 75 per-
cent over the 19 year period. This increase com-
pares to an increase in the Consumer Price Index
of roughly 100 percent the same period. Thus over
the period housing price appreciation has not kept
pace with inflation on average in the state. Be-
tween 1980 and 1990, appreciation was over 37
percent. Since 1990 it has been only about 27 per-
cent as appreciation rates slowed this decade in
the face of high interest rates early in the decade
and declines in the growth rate of the state. In the


Comparison of Housing Price
Index in Florida and Consumer
Price Index, 1980-2000


last years of the 1990s, appreciation rates were
higher including an over five percent increase in
the past year statewide.
The highest appreciation rate among MSAs was
in Naples, where the 1980 to 1999 index moved
from one in 1980 to 2.05 in 1999. Other MSAs with
appreciation rates above the state average for the
1980 to 1999 period include, in descending order,
Panama City, Miami, Jacksonville, Sarasota, Or-
lando, and Fort Walton Beach. Several MSAs did
not have sufficient data to calculate the index for
1999, but none likely would exceed the state av-
erage given their level in 1998.


Housing Affordability
The affordability of housing is a major issue na-
tionally, and it is no different in Florida. By some
measures, affordability increased substantially to-
wards the end of the last decade, primarily as a
result of lower interest rates during that period.
However, the use of indices focuses only on the
average and masks what is happening at the low
end. For households of lower income, the loss of
affordable housing from the stock and price in-
creases that have exceeded the growth in incomes,
among other factors, have led to a worsening prob-
lem of housing affordability.
As a means of examining the number of house-
holds with a housing affordability problem, we
calculate a number called cost burden. This num-
ber is our estimate of the number of Florida house-
holds paying more than 30 percent of their income
toward housing costs. The 30 percent figure cor-
responds to that used in federal housing programs.
Or estimate is that in 1998 there were about 1.75
million households paying more than 30 percent
of their income toward housing costs. By the year
2010, we project that number to increase to 2.1
million assuming no change in existing policies
and programs. About 44 percent of all renter
households are estimated to have a cost burden
as compared to about 22 percent of owner house-
holds. Almost 30 percent of the cost burdened

2 A description of the repeat sales methodology can be obtained from the
authors.


1980-2000








households have incomes below 30 percent of the
respective median income for their county. Over
75 percent of the households with a cost burden
have incomes below 80 percent of the county me-
dian for their county.


Impact of Housing on the
Florida Economy
There are a number of ways in which the im-
pact of housing on the Florida economy might be
measured. For example, we might examine the
number of jobs created in the construction and
related industries, the payroll on those jobs, or the
materials cost of a housing unit. We examine two
simple measures. First, in 1998 there were 253,823
sales of single family housing units (new and ex-
isting). With an average sales price of over
$100,000, these transactions total over $250 billion
in sales. This figure is the basis from which trans-
action fees, transfer taxes, mortgage fees, pur-
chases of new furnishings and equipment, and
other expenditures flowing into the economy are
generated. Second, the total value of the single
family housing stock in the state was over $341
billion in 1998. This figure is the basis for prop-
erty taxes as well as a measure of the wealth of
households. The figure does not include condo-
miniums, multifamily rental structures, or mobile
homes.


Conclusion
Florida's population is expected to continue to
increase, with the number of households increas-
ing by about one million over the next decade,
creating a corresponding need for additional hous-
ing units. Most households in the state are
homeowners, as the homeownership rate in the
state has risen to over 70 percent. The rate of
homeownership has increased in part as a result
of the aging of the baby boom generation; as
households become older they are more likely to
become homeowners.
Housing prices in Florida are generally below
national averages, yet the greatest housing prob-


lem in the state is housing affordability. Indices
of affordability show that on average the
affordability of housing has improved in the state
in recent years. However, an affordability index
masks the problems that households with incomes
below the median income have in obtaining suit-
able housing without paying more than 30 per-
cent of income toward housing costs. Whether
the 30 percent of income standard is an appropri-
ate criteria, whether some households pay more
than 30 percent of their income as a conscious
choice to overinvest in housing, and other issues
indicate that it is difficult to derive a single num-
ber of housing need. However, it is clear that there
is a substantial need in Florida. The affordability
calculations also indicate that the most severe
needs are for households with incomes below 30
percent of median income. This is a group that is
difficult to reach with state programs, but one that
becomes even more vulnerable with changes in
the federal public housing program.
While housing affordability is a problem in
Florida, substandard housing is less pervasive. In
part, this is a reflection of a relatively young hous-
ing stock in Florida that has been built in response
to the recent rapid growth of the state. There are,
however, areas of older housing stock in the state
that are in need of rehabilitation and the aging of
the existing housing stock will lead to additional
needs for rehabilitation in the coming years.
Florida is dominated by single family housing, and
this type of housing (including manufactured
housing) is particularly dominant in non-metro-
politan counties. Condominiums are largely con-
centrated in a few coastal counties.








Ordering Information
The complete State of Florida's Housing report will be available for purchase by the end of October at
a cost of $50. A separate, 200-page data appendix providing detailed county-by-county estimates and
projections will also be available for an additional $75.
If you wish to order a copy of these publications, please contact the:
Shimberg Center for Affordable Housing
Rinker School of Building Construction
College of Design, Construction & Planning
University of Florida
P.O. Box 115703
Gainesville, FL 32611-5703
Phone: (352) 392-7697
Fax: (352) 392-4364


Affordable Housing ISSUES is prepared bi-monthly by the Shimberg Center for Affordable Housing for the purpose of
discussing contemporary issues facing affordable housing providers. Reproduction of this newsletter is both permitted and
encouraged. Comments or questions regarding the content are welcome and should be addressed to Robert C. Stroh, Director.


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