Group Title: Affordable housing issues
Title: Affordable housing issues ; vol. 15 no. 4
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 Material Information
Title: Affordable housing issues ; vol. 15 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 2005
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Bibliographic ID: UF00087009
Volume ID: VID00033
Source Institution: University of Florida
Rights Management: All rights reserved by the source institution and holding location.


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M.E. Rinker, Sr., School of Building Construction College of Design, Construction & Planning PO Box 115703,
University of Florida, Gainesville, FL 32611-5703 TEL: (352) 273-1192 SUNCOM: 622-7697 FAX: (352) 392-4364

Volume XV, Number 4

June 2005

One of the primary objectives of the Shimberg Center's Florida Housing Data Clearinghouse
is to provide state and local policy makers and program planners with a centralized source for
estimates of current housing supply. Accomplishing this task has been made possible by the
continued support of the Florida Housing Finance Corporation. The current product of this ef-
fort is the report titled The State of Florida's Housing, 2004. This report first discusses changes
to Florida's population that occurred between 1990 and 2000; it details characteristics of the
housing stock in the state; it discusses issues in the affordability of housing in the state; and it
discusses the movement in house prices and the rate of appreciation in housing. The expectation
is that the information included in this study will help readers to understand the diversity, the
needs, the public policy concerns, and the opportunities of Florida's many housing markets.
The databases and reports produced by the Florida Housing Data Clearinghouse, including The
State of Florida's Housing, are publicly accessible on the Internet and may be found in the fol-
lowing two ways: (1) at, select "Fla. Housing Data" to access all avail-
able materials or (2) go directly to

The State of Florida's Housing, 2004 is a compendium
of facts on Florida's housing. The data highlight the
tremendous diversity in housing characteristics across
the state, particularly between the 35 urban counties and
the 32 rural counties, as well as between coastal and non-
coastal counties. The characteristics of Florida's housing
reflect the characteristics of the state's population.
The population of the state is growing, creating a de-
mand for additional housing, yet that growth is not dis-
tributed uniformly across the state. Growth is most often
a coastal phenomenon. Further, the nature of the growth
differs across the state as characterized by age, income,
race, ethnicity, and county of origin. The report examines
the changes to Florida's population between 1990 and

2000, Florida's housing stock, affordability of the hous-
ing stock, and price trends and forecasts for Florida's
housing stock. In addition to this growth, many of
Florida's communities have experienced income growth
from 1990 to 2000 above the rate of inflation that
should afford residents an improved standard of living.
Florida's housing stock is discussed in three broad
categories: single-family housing, condominiums, and
multi-family housing, which are further separated into
complexes with two-to-nine units and complexes with
ten-or-more units. This separation highlights the dif-
ference between the rural, urban, and coastal counties.
Single-family housing units dominate, but condomini-
ums are an important source of housing in some coastal
counties. Other broad trends are discussed including the
total number of units, the median age of units, and the


H 0 U

median sales price of units in each county. The coastal
and large urban counties tend to have the largest num-
ber of units and the highest median sales prices when
compared to the rest of the state.
Florida is currently experiencing the highest five-year
real rate of increase in housing prices that it has ever
seen. House prices have increased by almost 7.0 percent
per year over and above the general rate of inflation the
last three years. Housing prices are predicted to contin-
ue rising with the southern portion of the state and the
six largest metropolitan areas experiencing higher than
average increases; lower than average price increases
are forecast in the northwest part of the state.

Florida's population growth is diverse according to Dr.
Mary White of Albright College and Dr. Douglas White
of the Shimberg Center. This diversity stems from in-
creases in foreign-born migration, state-to-state migra-
tion, as well as growth in the native Floridian popula-
tion. Additionally, its population growth is not driven
solely by retirees, but also stems from growth in its
youth population as well as its working age population.
Florida's counties have been faced with diverse growth
within their boundaries as well with some census tracts
within counties experiencing large growth in the elderly
population while other tracts are experiencing large
increases in younger age groups. The needs of these
residents are different. Large growth in the school-age
population will force communities to focus on access
to schools while i '\\l th in the elderly population will
result in Tract focus on other community amenities.
By and large, Florida's residents are experiencing real
income increases that will affect their ability to afford
housing and the type of housing they choose. Florida's
growth is continuing in its coastal communities but is
also occurring in many rural areas located near urban
centers. Although many are aware of the high growth
in South Florida, it is evident that all of Florida has
benefited over the past decade.

Dr. Douglas White and Dr. Marc Smith, both of the
Shimberg Center, point out that Florida's housing stock
includes single-family units, multifamily units, and
manufactured units. Although all three types of housing
units are represented, the housing inventory is domi-
nated by the single-family home. About 58 percent of

the state's single-family housing stock is located in six
major metropolitan areas: Fort Lauderdale, Jacksonville,
Miami, Orlando, Tampa-St. Petersburg, and West Palm
Beach-Boca Raton. The Fort Lauderdale and Miami
MSAs, because of their density, also have the distinction
of having the most multifamily housing of any area in
the state. Although not a type of structure, condominium
housing is an important housing category in some areas
of the state. Broward, Miami-Dade, and Palm Beach
Counties alone have 58 percent of the state's condo-
miniums. Significant concentrations of condominiums
are also found in Collier, Lee, Pinellas, and Sarasota
Counties. Clearly, condominiums tend to be a coastal
County property appraiser data provides a wealth of data
on characteristics of the housing stock across the state.
The county-by-county and metropolitan statistical area
(MSA) summaries clearly show differences in the im-
portance of single-family properties, condominiums, and
multifamily properties. Also apparent are differences
across the state in the age and size of units. Finally, there
are significant differences in the numbers of transactions
each year and in the median values of properties. The
differences show that the state might be characterized as
two states when thinking about the housing market, with
the large urban and coastal counties at one extreme and
the small, rural inland counties at the other.

Florida's most affordable housing is generally located
in rural counties in the interior and northern parts of the
state according to Dr. Douglas White of the Shimberg

Center. In general, the least affordable counties are
either coastal counties or located in major metropolitan
areas. After years of increasing affordability, housing
became less affordable in Florida over the last year.
This decline in affordability is likely due to the fact that
housing prices have continued to appreciate rapidly in
the state while personal income has experienced little
growth over the last two years.
Three factors are the primary determinants of the af-
fordability of housing: household income, housing
prices, and mortgage rates. For a household consider-
ing homeownership, an additional factor is the rate of
appreciation in housing prices. One measure of housing
affordability is the cost of homeownership, commonly
conveyed through housing affordability indices such as
that published by the National Association of Realtors
(NAR). These indices generally indicate that afford-
ability increased substantially toward the end of the last

decade, primarily as a result of lower interest rates dur-
ing that period, but have lessened through the beginning
of the current decade as a result of rising housing prices.
An affordability index is presented in The State of
Florida's Housing for all counties in Florida and for the
years for which sufficient data are available (at least 25
sales each year, as these sales data provide the basis for
the calculation of a median sales price of a home). The
index presented differs from those of the NAR index
because the property appraiser data are the source for
home sales transaction prices rather than the Multiple
Listing ServiceTM used by the Realtors. Also, the me-
dian incomes used are for household income rather than
for family income.
The number of counties with an index value below
100 totaled eighteen in 1995 and declined to thirteen in
1998. However, after 1998 the number of counties with
an index value below 100 started to rise, and twenty-
three counties fell in this category in 2002. As would be
expected, the number of counties with an index value
above 150 fell from seventeen in 1995 to 12 in 2002.
These numbers point to a lessening of housing afford-
ability in Florida in 2002.
In interpreting the affordability indices for each county,
several caveats should be considered. First, as a result
of the limited sales transactions in some smaller coun-
ties, the median sale price may vary considerably from
year to year. This fluctuation in the estimated median
house price produces an exaggerated variability in the
calculated affordability index. Second, the calculation
of the index using median house prices and incomes
may mask the distribution of affordability across the
various income brackets within a county or MSA. For
example, if house prices in a county tend to be tightly
distributed around their median value, while incomes
are more widely dispersed, then affordability problems
will exist at the lower income ranges that are not identi-
fied by the affordability index. Thus, standard indices
based on median house prices and median incomes are
only one measure of housing affordability. What the
affordability indices provide is an indication of the rela-
tive change in affordability within counties over time,
and the relative affordability of housing across counties.

Thirty-year fixed mortgage rates continued to decline
from an average of 6.54 percent in 2002 to 5.82 percent
in 2003. This decline, coupled with a relatively stable
state economy, continued to fuel rapid house price
increases across the state of Florida n 2003 according to
Dr. Dean Gatzlaff of Florida State University's Real Es-

tate Center. Estimates indicate that, on average, single-
family house prices in Florida increased by 9.04 percent
in 2003, down slightly from 9.31 percent the year prior.
In comparison, single-family house prices in the United
States during this same period were reported by the Of-
fice of Federal Housing Enterprise Oversight (OFHEO,
2003) to have increased by 5.56 percent. In only Rhode
Island (11.81%) and California (9.44%) did statewide
house price appreciation exceed Florida's rate.
Interestingly, these rapid house price increases were
achieved during a period of historically low general
inflation (1.88%), resulting in a 2003 inflation-adjusted
appreciation rate for single-family homes in Florida of
7.16 percent. On average, house prices have increased
almost 7.0 percent per year over and above the general
rate of inflation over the last three years. This percent-
age represents the largest inflation-adjusted rate increase
during any three-year period recorded, including the
high appreciation period of the 1970s. Estimates indi-
cate that questions regarding the U.S. economy and the
uncertainties associated with the war in Iraq have not
slowed recent house price appreciation.
During the 2001 to 2003 period house price increases
have exceeded general inflation in each of the state's 20
Metropolitan Statistical Areas (MSAs). Preliminary es-
timates indicate that, on average, house prices in Florida
have increased by 8.75 percent annually since 2001.
When compared to the 1.94 percent average annual rate
of general inflation over this same period, average real
house price appreciation is found to be 6.81 percent.
Although mortgage interest rates are expected to rise
from their current levels causing appreciation rates to
diminish during the latter half of this decade, continued
population growth and supply limitations will likely
moderate this effect. The persistence in the 2001 to
2003 price trends has resulted in an upward revision to
previously reported Florida house price appreciation
forecasts. On average, Florida house prices are forecast
to increase by about 6.0 percent per year during the
2004 to 2010 period, resulting in an average annual
increase of 6.9 percent for the decade.

Florida's 67 counties include 35 urban counties and
the 32 rural counties. The urban counties can also
be divided into those that are a part of the six major
metropolitan areas and fifteen other metropolitan areas.
Almost 94% of the single-family homes and 98% of
condominiums are located in these urban counties. The
rural counties can be further divided into coastal and
non-coastal counties. Besides housing differences in the

urban and rural counties, there are often also a number
of differences in housing characteristics between coastal
and non-coastal counties.
These housing differences reflect the differences in the
characteristics of the population in different areas of
the state. The population of the state is growing rapidly
and is occurring throughout the state, but not uniformly.
Different areas of the state are characterized by differ-
ences in the distribution of households by age, income,
race, ethnicity, and county of origin. The report has
shown that many areas of Florida are heavily reliant
on increases in the foreign born population while other
areas of the state are experiencing much larger increases
in their native-born population or increases in the num-
ber of U.S. citizens migrating from other states.
In contrast, there are also areas of the state that have
experienced population gi_'\\ lh simply due to the relo-
cation of Floridians from one county to another. This re-
port has also shown there is great variability in the age

of counties' residents with some counties experiencing
large growth in their elderly population, others experi-
encing large growth in their adult working age popula-
tion, and others experiencing increases in their juvenile
population. These are only a few of the differences that
highlight the possibility that different counties will face
different housing problems in the future. Single-family
housing units dominate the state, but condominiums are
an important source of housing in some coastal coun-
ties and manufactured housing plays a key role in rural
counties in the interior of the state. In spite of Florida's
large gains in their housing stock, housing costs have
continued to rise. Although the rate of appreciation is
expected to slow, estimates indicate the rate will exceed
6 percent for the rest of the decade. As housing prices
continue to increase in Florida, housing affordability
is becoming more of a problem. This point can best be
illustrated by the fact that this year's housing affordabil-
ity index has the most counties below 100 since 1995.

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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