RELATIONSHIP BETWEEN THE NATUR AL URBAN-GROWTH BOUNDARY AND AFFORDABLE HOUSING IN BROWARD COUNTY, FLORIDA By TOBY WILLIAM GRIFFIN LAWRENCE A THESIS PRESENTED TO THE GRADUATE SCHOOL OF THE UNIVERSITY OF FLOR IDA IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE IN BUILDING CONSTRUCTION UNIVERSITY OF FLORIDA 2006
Copyright 2006 by Toby William Griffin Lawrence
This document is dedicated to my parents.
iv ACKNOWLEDGMENTS Above all, I would like to thank my parent s for their continued support while I have been at the University of Florida. Wit hout their love and support, my educational attainments would not be possible. Additi onally, I would like to thank the faculty and staff at the University of FloridaÂ’s Warri ngton College of Business Administration and the M.E. Rinker, Sr. School of Building C onstruction who have provided a structured environment in which to pursue my educational goals.
v TABLE OF CONTENTS page ACKNOWLEDGMENTS.................................................................................................iv LIST OF TABLES............................................................................................................vii LIST OF FIGURES.........................................................................................................viii ABSTRACT....................................................................................................................... ix CHAPTER 1 INTRODUCTION........................................................................................................1 2 LITERATURE REVIEW.............................................................................................4 Real Estate Market Economics.....................................................................................4 Why is Broward County Unique?.................................................................................8 Portland, Oregon...........................................................................................................9 Housing Affordability in Broward County.................................................................11 National Association of Home Builder sÂ–Wells Fargo Housing Opportunity Index................................................................................................................11 Affordable Housing and the Rental Market........................................................13 Affordable Housing and the Owner Market........................................................15 3 METHODOLOGY.....................................................................................................17 4 ANALYSIS.................................................................................................................19 Factors Influencing Supply-a nd-demand in Broward County....................................22 Land Availability.................................................................................................22 Economic Growth................................................................................................23 Population............................................................................................................24 Interest Rates.......................................................................................................26 Economic Analysis.....................................................................................................28 How Has Construction Responded?...........................................................................28 Limitations of This Study...........................................................................................30 5 CONCLUSIONS AND RECOMMENDATIONS.....................................................32
vi APPENDIX A HOUSING PRICE INDEX.........................................................................................35 B HOUSING OPPORTUNITY INDEX.........................................................................37 C VACAND LAND BY LAND-USE DESCRIPTION 2000-2004..............................38 D BUILDING PERMITS AND VACANT LAND........................................................40 LIST OF REFERENCES...................................................................................................41 BIOGRAPHICAL SKETCH.............................................................................................44
vii LIST OF TABLES Table page 4-1 Comparison of vacant-land and housi ng affordability in the Broward County area for the years 1995, 2000, and 2004..................................................................19 A-1 Housing price index for the Fort Lauderdale-Pompano Beach-Deerfield Beach Metropolitan Statistical Area, first quarter 1991-first quarter, 2005........................36 B-1 Median price (in thousands of dolla rs), housing opportunity index, and median income (in thousands of dollars) for Broward County, Florida for 1995.................37 B-2 Median price (in thousands of dolla rs), housing opportunity index, and median income (in thousands of dollars) for Broward County, Florida for 2000.................37 B-3 Median price (in thousands of dolla rs), housing opportunity index, and median income (in thousands of dollars) for Broward County, Florida for 2004.................37 C-1 Vacant Land Inventory by Land Use De signation for Broward County, Florida for the Years 2000 and 2004 (BCPSD, 2005)..........................................................39 D-1 Residential building permits and vacant land data for Broward County for the years 2000-2004.......................................................................................................40
viii LIST OF FIGURES Figure page 2-1 Median house-price versus median in come for the Fort LauderdaleÂ–Pompano BeachÂ–Deerfield Beach Metropolitan St atistical Area MSA (NAHB, 2006)..........12 2-2 Housing opportunity index for the Fo rt Lauderdale-Pompano Beach-Deerfield Beach Metropolitan Statistical Area, annualized data for the years 1991-2005 (NAHB, 2006)..........................................................................................................13 4-1 Comparison of vacant land and housi ng opportunity index in Broward County, Florida for the years 1995, 2000, and 2004..............................................................21
ix Abstract of Thesis Presen ted to the Graduate School of the University of Florida in Partial Fulfillment of the Requirements for the Degree of Master of Science in Bu ilding Construction RELATIONSHIP BETWEEN THE NATUR AL URBAN-GROWTH BOUNDARY AND AFFORDABLE HOUSING IN BROWARD COUNTY, FLORIDA By Toby William Griffin Lawrence May 2006 Chair: R. Raymond Issa Major Department: Building Construction The issue of affordable housing is important on national, state, and local levels. Insufficient affordable housing can have a dir ect and negative eff ect on the labor force and the local economy. Indicators show that Broward County, Florida is currently in the midst of an affordability crisis. Because of e nvironmental factors that limit the amount of developable land within the County, and a populat ion that is forecasted to continue its rapid increase, this dilemma is expected to continue. Broward County is approaching build-out of its vacant developable land a nd must look to new ways to make housing affordable for its growing population. Ou r study aimed to determine if the limited amount of developable land dictated by the ur ban growth boundary is contributing to the current affordable housing crisis. We iden tified and analyzed contributing supply-anddemand factors to get a better understanding of affordability issues in a region that is approaching build-out of its vacant lands.
1 CHAPTER 1 INTRODUCTION In Broward County, as in the rest of the United States, home pri ces are appreciating rapidly. Many economic conditions ar e driving the prices of home s to historical heights. Fueled by historically low interest rates and an ever-increasing population, the demand for housing is at an all-time high. Unfortunately, home-price appreciation ha s far outpaced the increases in median household income, creating a housing affordabili ty crisis in Broward County, Florida. Generally, a housing unit is considered affordable when no more than 30% of a householdÂ’s income is spent on housing costs. The 2003 American Community Survey (2005) indicates that 56% of rental househol ds and 42% of owner households face such a dilemma, and suggests that Br oward County is in the middle of an affordability crisis. Broward County is well known for its c ool ocean breezes in the summer and radiant sunshine in the winter . It is also an eclectic and vivacious place for many growing businesses, corporati ons, and others who seek a uni que South Florida lifestyle (BCPSD, 2004a). Although Broward County to tals nearly 1,200 (1,197) square miles, over two-thirds (787 square miles) of the Count y is in its natural st ate and not capable of being developed. This means that Brow ard County has only 410 square miles of developable land (Broward County Planning Se rvices Division (BCPSD), 2003b). The presence of this natural Urban-growth boundary limits outward growth and serves as an obstacle for achieving housing affordability.
2 At the same time that the supply of land is dwindling, population is expected to grow from the current 1.6 million (as of 2000) to 2.5 million by 2030 (BCPSD, 2002). An examination of Broward CountyÂ’s Land Us e Plan and vacant-lands available for development shows that there is an insu fficient amount of vacant-land available to accommodate the anticipated population growth. At current rates of development, it is forecasted that residential lands in the C ounty will be built-out before 2015. Broward County is the first county in the State of Flor ida to face such an issue. Build-out occurs when undeveloped, vacant-land is no longer av ailable. The only way to achieve new development is by subdividing, reconstructing, or demolishing existing properties. Given the projected growth in population anticipat ed in every population forecast through 2030, the issues relevant to bui ld-out and redevelopment ar e critical (BCPSD, 2004a). As the amount of developable land dec lines, County officials must look for new ways to accommodate the overwhelming de mand for housing. As current supply-anddemand trends continue, affordable housing i ssues will affect a greater proportion of people in Broward County, eventually extending into the middle-class. The issue of affordable housing affects everyone in the community. Insufficient affordable housing can have a direct and nega tive effect on the labor force and the local economy. The current dilemma could be furt her exacerbated as land becomes completely used up and the population c ontinues its rapid growth. We investigated house-price appreciation in Broward C ounty in recent years and provide a primer on real estate economics to understand how real estate values are determined. We then looked at why Br oward County is a unique place due to environmental constraints that create an undevelopable urbangrowth area that surrounds
3 the County. We also summarized previous research evaluating relationships among urban-growth boundaries, house-price appreciation, and affordability. To determine if decreased affordability in Broward County in recent years was the result of the diminishing amount of land, we compare vacant-land inventory with an acceptable housing affordability metric. We also identified and analyzed contributing supply-and-demand factors partic ular to Broward County. Fu rther evaluation of building permits issued offers insight into how th e construction industry is responding to the changes in demand, given land-supply constraints. The impact of urban-growth boundaries on housing prices is the subject of ongoing debate. Home prices have increased dram atically in Broward County, but are these increases due specifically to the urban-gr owth boundary? More importantly, is the presence of an urban-growth boundary precipit ating the affordability crisis in Broward County?
4 CHAPTER 2 LITERATURE REVIEW A recent press release from the Office of Federal H ousing Enterprise Oversight, herein referred to as OFHEO, regarding hom e prices indicated that the average home in Broward County increased 23.62% in value fr om the first quarter of 2004 through the first quarter of 2005 (OFHEO, 2005). This in crease is more than double the national average increase of 12.5% over the same span, ranking the Ft. LauderdaleÂ–Pompano BeachÂ–Deerfield Beach Metropolitan Statistical Area (MSA) as the 24th highest one-year Housing Price Index increase (Appendix A). Appreciation for the first quarter of 2005 was 4.39% or 17.56% annualized. As of the first quarter of 2005, the Housing Price Index for the Ft. Lauderdale MSA is at 244.94, its highest value ever. The new data represent the largest fo ur-quarter increase since the thir d quarter of 2003 when the largest increase ever occurred. In fact, housing pri ces more than doubled (a 105.4% change) in the 5 year period ending March 31, 2005 (OFHEO, 2005). To get a better understanding of why housing prices in Broward County are increasing at such fast rate, a basic overview of real estate market economics must be explained. Real Estate Market Economics The price at which goods, capital, and servic es are exchanged and to whom they are allocated is determined by the interaction of supply-and-demand within the economy. The interrelationship of three different economic sectors determines the values of real
5 estate. These sectors are the Â“realÂ” world, the Â“financialÂ” world and government (Ling and Archer, 2005). The real world, or user market, refers to the old adage of Â“location, location, location.Â” However, this attribute can be complex and ever-changing. Location is access to whatever may be important for a certain economic activity, and it is this demand for access that determines the demand for urban space. A given site possesses as many locations as it has different possible uses. It can be one location for single-family residential use and another for manufacturing. Th e desirability of a site derives from the important access needs particular to each possi ble use, often called linkages. The various uses bid for sites based on their desired access criteria. The Â“highest and best useÂ” of a site is the use offering the highest bid. It controls the site and imp rints its access needs on the site, as well as its surroundings. Compe tition amongst users institutions, businesses, households, and individuals Â– for physical loca tion and space determines who is allocated the property and how much is paid for its use (Archer and Ling, 1997). In the financial world, or asset market, real estate competes with other assets for a place in an investorÂ’s portfolio. The re venue streams generated by rents and the appreciation of the principle value of the asset are contribut ing factors to the investorÂ’s decisions. With risk being equa l, investors purchase real estate when the perceived return on investment is greater than that of other as set classes (i.e. stocks and Treasury Bonds). Furthermore, the sum of the rental income r eceived and the appreciated value of the real estate asset must be greater than the acqui sition and maintenance costs, so that the investor receives a return on investment significantly greater than what they might find in other asset classes.
6 Federal, state, and local governments can a ffect real estate markets in a multitude of ways. On a federal level, income tax polic y may affect the value of real estate, federal financial reporting and disclosure requiremen ts affect operations in the capital market, and environmental policy can significantly a ffect land use. State governments affect entry into real estate-related occupations w ith licensing regulati ons, building design and cost with statewide building codes, and land use controls with envi ronmental regulation. However, it is the local governme nt that generally has the larg est influence on real estate. Local governments affect the s upply and cost of real esta te through zoning codes and other land use regulations, fees on new land deve lopment, and building codes that restrict methods of construction. Furthermore, loca l government affects rental rates in user markets through property taxes. Finally, lo cal government significantly affects the supply and quality of real estate by its contro l of the community infr astructure such as social services, schools, flood cont rol, utilities, mass transit, br idges, roads, etc. (Ling and Archer, 2005). It is the interaction of the three economi c sectors that determines value. The amount of rental income for each property is determined in the user market as households and firms compete for the currently availabl e supply of locations and space. The financial resources necessary to acquire and develop real esta te assets are determined in the capital market, When evaluating real estate economics, ther e is one basic princi ple that should be kept in mind: in the long run, supply-and-dema nd will be in equilibrium. However, this principle can change if there is a rise or fall in economic growth. A sharp increase in
7 economic growth can stimulate more real esta te transactions and new construction, while a decrease can have the opposite effect. When significant economic growth occurs, the short run effect is a rise in rental rates as demand for space increas es and vacancy rates decrease. As real estate becomes a more attractive investment, new investors are drawn in and the demand for property increases, provided that interest rates are low and the economic outl ook is not too risky. As a result, existing properties then beco me more sought after and new construction commences. Ultimately, the additional supply provided by the new construction causes rents in the space market to decr ease. The market is now said to be in equilibrium. The supply of space, although inelastic (not price re sponsive) in the short run, becomes fairly elastic (price responsive) in th e long run (Archer and Ling, 1997). Factors influencing the demand for space in the property markets include the number of buyers and sellers in the market, interest rates, property taxes, close substitutes and consumer confidence, amongst others. New construction cannot react to demand changes in the short-run because new construc tion is a time-consuming process. In the short-run equilibrium it is evident that transactions occur as willing sellers of existing properties find willing buyers. However, l ong-run equilibrium requires that property prices equal construction costs. Acco rding to Archer and Ling (1997, p.11-12), A primary determinant of the feasibility of new construction is the relationship between the current level of property prices and the cost of ne w construction. If current supply-and-demand conditions in the market are such that property values are greater than the cost of new cons truction Â– including land costs and a fair developer profit Â– developers and invest ors will have an incentive to add new construction to the existing stock in an attempt to capture these excess profits. The supply of space and current rents cannot immediately adjust to changes in tenant demand, discount rates, and federal tax treatm ent, so real estate markets tend to be highly cyclical, with market values eith er above or below, but seemingly never equal to, construction costs.
8 Why is Broward County Unique? Broward County is an urbanized county loca ted in southeast Florida. Its enjoyable climate, favorable low-tax policy, and high quality of life make Broward County an attractive destination for tourists and residents, as well as co rporations. In addition to a year round climate averaging 74 degrees ( BCPSD, 2003b), Broward County also enjoys the State of FloridaÂ’s low-tax policy. Resi dents are not subject to personal income tax, inventory tax, state property tax, and co rporate franchise ta x on capital stock. Additionally, the majority of Broward C ounty residents (51.5%) have indicated an Â“improvedÂ” quality of life since 2002 (P rofessional Research Consultants, 2004). Characteristics of the State of FloridaÂ’ s housing market draw similar comparisons to the stateÂ’s population. The population of th e State of Florida is growing exponentially and contributing to an increas e in the demand for housing. However, that growth is not distributed evenly throughout the state. High growth areas seem to be concentrated along FloridaÂ’s beautiful coastline. Population gr owth in Broward County has primarily been the result of net migration. The economy, lifestyle, climate and geographic proximity to South and Central America have drawn peopl e to the South Florid a area (BCPSD, 2004). However, Broward CountyÂ’s constraine d geography also makes it unique. Broward County is bordered by the Atlantic Oc ean to the east, FloridaÂ’s Everglades to the west, Miami-Dade County to the south, and Palm Beach County to the north. The County consists of nearly 1,200 square miles of land; however, most of the land area (66%) is located in a water management area in the western portion of the County and is in its natural state. The area is called the Everglades Conser vation Area and is not currently developable. This means that Broward County is surrounded by a natural Urban-growth boundary. An urban-growth boundary (UGB) is a line drawn on a map to
9 contain urban-growth and sepa rate it from rural and envi ronmentally sensitive lands (National Association of Realtors, 2001). Portland, Oregon Although UGBÂ’s have been implemented in several areas in the United States, the UGB in Portland, Oregon has garnered the most attention. PortlandÂ’s UGB was adopted in 1979 as part of OregonÂ’s statewide growth -management law in an attempt to separate urban land from rural land. An elected regi onal government, Metro Council (Metro), is responsible for managing PortlandÂ’s metropolitan urban-growth boundary. According to Metro, the UGB is one of the tools used to protect farms and forests from urban sprawl and to promote the effici ent use of land, public f acilities and services inside the boundary (Metro, 2006). Metro indicates that the UGB also keeps the downtown area in business by continuing to develop and redevelop land and buildings lying within the urban core. Additionally, an effective UGB assures businesses and local governments of the location of future infras tructure that is necessary for growth. Portland state law requires that Metro ha ve a 20-year supply of land for future residential development within the bounda ry. Land-supply within the boundary is reviewed every five years to determine if th e area within the UGB is capable of meeting the criteria. If necessary, Metro may expa nd the boundary in order to meet the landsupply requirement. A research study on home price apprecia tion and PortlandÂ’s urban-growth boundary published by the Fannie Mae Foundati on reached the following conclusions (Downs, 2002). 1. House-prices in a region do not necessari ly appreciate faster due to the mere presence of an UGB, even a stringently drawn one, compared to comparable regions without an UGB.
10 2. However, widespread and restrictive local land use controls in the form of a strongly enforced and tightly drawn UGB, can exert upward pressure on the rate of house-price appreciation at le ast for a short period of time, if other factors that strongly stimulate the demand for housing are present in the region. 3. If a region with a tightly enforced a nd stringently drawn UGB is experiencing economic prosperity, such as high and fa st-rising incomes, and confronts rapid house-price appreciation, the region should try to improve affordability by adding more developable land. 4. Even if combined with strong demand, nonstringent growth containment programs or relatively weak UGB's will probably not cause housing prices to increase Downs research analyzed changes in home prices for 86 large metropolitan areas, across various regions and va rious time frames from 1968 to 2001. His results showed that home prices in Portland Oregon were rising faster than anywhere else only for the years 1990 to 1994. Downs credits two factors fo r this rapid increase: job growth and a policy decision by Metro in 1992 not to expand the boundary significantly (Downs, 2002). At this time, single family home devel opers had to actively pursue the remaining available land within the ex isting boundary. This pursuit bid up the price of land and ultimately, the price of housing (Fischel, 2002). A regional UGB puts upward pressure on the price of land within the boundary. Â“If it is drawn to include only a small amount of vacant, developable land in relation to the amount of land that has been absorbed by new growth historically, property values within the UGB will increase. This is because the UGB reduces or eliminates the potential for market competition between owners of land inside the UGB and those with property outside the UGB. In effect, the UGB gives a market advantage on the owners of land within the UGB (National Asso ciation of Realtors, 2001, p.5). If home prices and rents increase faster than the rate of income increase, housing cost burdens increase, particularly for lower income households. Â“Therefore, increases in
11 the prevailing level of housing prices make housing affordability worse in all regions. The faster those increases occur in any given time period, the worse off non-homeowning households at the bottom of the income distribution becomeÂ” (Downs, 2002, p.10). Housing Affordability in Broward County As prices continue their rapid rate of in crease, Broward CountyÂ’ s current affordable housing stock is diminishing. A worsening housing affordability problem for lower income households stemming from the price in creases that have exceeded the growth in incomes, as well as the diminishing amount of affordable housing (Galvez, et al., 2003). National Association of Home Builders Â–Wells Fargo Housing Opportunity Index To achieve a better understanding of the housing affordability in each region, the National Association of Homebuilders (NAHB) compares income and home prices for various metropolitan statisti cal areas (MSA) (Appendix B) . NAHB uses home sales transaction records from First American Real Estate Solutions and compares the data to the annual median family income estimates for each MSA, as documented by the Department of Housing and Urban Devel opment. Figure 2-1 shows the growing disconnect between median house-prices a nd median income. Although house-prices have increased at a rate of 11.46% annually from 2000 to 2004, this annual rate is much higher than the rate of increase in median family incomes during the same timeframe (1.5% annually). If the cost of housing in a given area increases faster than incomes, housing becomes less affordable to people in that area.
12 Median House Price Median Income 0 50 100 150 200 2501991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005*YearAmount (in thousands of dollars) Figure 2-1. Median house-price versus median income for the Fort LauderdaleÂ–Pompano BeachÂ–Deerfield Beach Metropolitan St atistical Area MSA (NAHB, 2006) The Housing Opportunity Index (HOI) is desc ribed as the share of homes sold in a particular area that are afford able to a family earning the median income. The two major components are income and housing cost . NAHB adopts the lending industryÂ’s conventional assumption that a family can a fford to spend 28% of its gross income on housing. That share is then divided by twelve in order to arrive at a monthly income figure. Out of 159 metropolitan areas, with a highe r ranking translating into less housing affordability, the Ft. Lauderdale MSA currently ranks 109th nationally. The annual median family income for first quarter 2005, as reported by the United States Department of Housing and Urban Development (herein called HUD), is $58,100 with the first quarter median home sales price at $ 210,000. As illustrated in Figure 2-2, the affordability of housing in Broward County has been steadily decreasing since 2001 to an all-time area low of 46.2 as of the first quart er of 2005. This means that during the first
13 quarter of 2005, 46.2% of homes sold in th e Ft. Lauderdale MSA are affordable to families earning the median income. 30 40 50 60 70 80 901991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005*YearIndex Value Figure 2-2. Housing opportunity index fo r the Fort Lauderdale-Pompano BeachDeerfield Beach Metropolitan Statistical Area, annualized data for the years 1991-2005 (NAHB, 2006) A housing unit is considered affordable if it costs no more than 30% of the householdÂ’s income, according to HUD. T hose households spending 30% or more of their gross income are considered to have a co st burden. It is impor tant to mention that many people in hot housing markets, like Browar d CountyÂ’s, stretch to spend more than 30% of their gross income on housing. However, many lower-income households are sacrificing what they spend on basic needs in order to meet housing costs. Affordable housing issues affect both the owner and re ntal housing markets in Broward County. Affordable Housing and the Rental Market Rental housing accommodates many different populations including: new migrants that have recently moved into the county; households that are una ble to afford home ownership; mobile households th at prefer the flexibility of renting; and newly formed households.
14 Data from the 2003 American Community Survey, a census conducted by the United States Census, collects annual inform ation from U.S. households similar to information collected every ten years in the decennial Census long form, indicate that nearly half (45.6%) of renter s spend more than 35% of their household income on rent. In addition to the difficulty of meeting fi nancial emergencies, a high rent-to-income percentage makes it difficult for households to save money for the down payment and closing costs associated with the purchase of a home. It has been shown that rental households have lower incomes than homeowners. In 1999 more renters had household incomes under the poverty level (19.4%) than did homeowners (7.0%). The median income for renters in 2000 was at $30,433 and $48,576 for homeowners. Average household size was slightly higher in owner-occupied units (2.49) than in rental units (2.35) (BCPSD, 2005). According to 2003 American Community Survey data, median gross rent (contract rent plus the estimated average cost of utili ties and fuels per month) is at $859 per month in Broward County, a 13% increas e (not adjusted for inflation) from the $757 per month median rental rate determined by Census 2000 data. Gross rent represents all occupied units which are not owner occupied and is calculated based on the total number of Specified Renter Occupied Units minus the num ber of units in the no cash rent category In their report, State of the NationÂ’s Housing 2005 , the Joint Center for Housing Studies at Harvard University indicates th at a person must make over four times the minimum wage rate in order to be able to pay for rent in Broward County. This multiple of the minimum wage rate was calculated to afford Fair Market Rent on a modest 2-
15 bedroom unit assuming a housing cost burden of 30%, working 40 hours a week for 52 weeks a year, and given the 2004 minimum wage rate of $5.15 per hour. Affordable Housing and the Owner Market For a majority of homeowners, buying a hom e represents their largest expenditure and biggest investment. According to the 2003 American Community Survey, the median owner cost for householders with a mortgage was $1,449 per month in Broward County. This is higher than Miami-Dade County ($1,320), Palm Beach County ($1,385), and the nation ($1,204). The distribution of housing costs for Broward County indicates that 18.3% of homeowners pay up to $999 per month, 35.2% pay between $1,000 and $1,499 per month, and 46.4% pay above $1,500 per month. According to 2003 American Community Survey data, 41.6% of households are spending more than 30% of their income on their mortgage. An increase in the percentage of income appropriated to housi ng costs causes a financial strain on household budgets. Median annual household income st ands at $42,659. With median mortgage costs at $1,449, median singlefamily owner costs (with a mortgage) consume 40.8% of household income according to the 2003 data. As incomes rise, the pro portion of income devoted to housing costs generally decreases. Homeowners having a househol d income at or above $75,000 spend less than 20% of their income on housing. Alternativel y, two-thirds of all homeowners having an income less than $35,000 spend more than 30% of their income on housing (BCPSD, 2003). The issue of affordable housing is important on national, state, and county levels. Homeownership is an important goal for bot h individual and societal reasons and is influenced by public policy. It is important to real estate industry participants because
16 the amount of households able to purchase a new home has a direct effect on the amount of transactions in a particular area. Affordability is also important to households because it has a direct effect on a house holdÂ’s ability to purchase a home, as well as the size and amenities of a home they are able to qualify for. Broward CountyÂ’s urban-growth boundary li mits the amount of land available in the County. However, it is still not clear that the limited available land is causing affordability to decrease. Next we offer a procedure to determine if the limit of available land is contributing to housi ng price increases and, therefore, decreases in housing affordability.
17 CHAPTER 3 METHODOLOGY An urban-containment boundary restrict s the amount of land available for development and inhibits outward growth. The affect of house-price appreciation on housing affordability has been well documented. As prices increase faster than the rate of incomes are increasing, homes become less affordable to people living in the area. The aforementioned information from the Hous ing Opportunity Index demonstrates that the availability of affordable housing drastically decrease d beginning in 2001 and continued to the present. In order to determine if the decreased affordability beginning in 2001 was the result of the diminishing amount of land, contri buting supply and affordability factors for the years surrounding 2001 will be compared. As Broward County continues the developm ent of vacant-lands within the urban containment boundary it is quickly running out of land suitable for development. This is because Broward CountyÂ’s urban-growth boundary is put in place by environmental restrictions and is not capabl e of being expanded. Available land data was obtained from the BCPSD and was only available for the years 1995, 2000, and 2004. The factors inherent to the determina tion of housing affordability are household income and home prices. The NAHB-Wells Fa rgo Housing Opportunity Index uses sales transactions from First Ameri can Real Estate Solutions to determine the median price of single-family homes for each MSA. This number is compared to the median income estimates for the corresponding MSA provided by HUD to determine th e percentage of homes in a particular area that are affo rdable to those families earning the median
18 income. This data is published quarterly for each MSA, dating back to 1993. The quarterly data for each year will be added together and divided by four to determine annual data for the years 1995, 2000, and 2004 corresponding to the available vacantland data (See Appendix B). Next we will display, compare, and analyze house-price, income, and available land data for the years 1995, 2000, and 2004. We will also identify and analyze the supply-and-demand factors partic ular to Broward County that may have also contributed to the rapid price increases experienced in the region. A section on how the construction industry has responded using permit data fo r the years 2000 and 2004 is also included. .
19 CHAPTER 4 ANALYSIS Using data provided by the National A ssociation of Home Builders and the BCPSD, the affect of the natural UGB on a ffordable housing in Broward County may be examined. Annualized median house-price, median income, HOI Index, and available land data for the years 1995, 2000, and 2004 are displayed in Table 4-1 (See Appendix B for quarterly house-price, income and HOI va lues). Vacant-land data is displayed in thousands of acres and is calculated for al l of Broward County. Median income and median price data are displayed in thousands of dollars and calculated for the Fort Lauderdale-Pompano Beach-D eerfield Beach MSA. Table 4-1. Comparison of vacant-land and housing affordability in the Broward County area for the years 1995, 2000, and 2004 Data 1995 2000 2004 Vacant and (in thousands of acres) 59.0 37.8 23.8 Housing opportunity index 68.4 71.3 52.1 Median income (in thousands of dollars) 43.1 54.5 57.7 Median price (in thousands of dollars) 97.3 120.0 186.0 A comparison of vacant-land data shows a st eady decrease in available, vacant-land over the entire time period examined. Approximately 36% (35.93) of vacant, developable land was consumed over the five years from 1995 to 2000. This is nearly identical to the 37.15% of available land c onsumed over the four years between 2000 and 2004. However, average annual consumption of available land reveals that vacant-land was consumed faster as it became scarcer. Annual consumption of vacant available land averaged 9.29% from 2000 to 2004 compared to 7.39% for years 1995 to 2000. As home
20 prices appreciate faster than incomes are rising, homes become less affordable to people living in the area. The Housing Opportunity Index measures housing affordability by comparing median income and median single family home prices for various MSA in order to determine the percentage of homes in an area available to families earning the median income. The Index demonstrates that hous ing affordability increased only slightly (4.24%) from 1995 to 2000, however housing affordability decreased 26.78% from 2000 to 2004. In 2004 only 52.1% of houses in the Fo rt Lauderdale MSA were affordable to people in the area earning the median income . As Broward County approached build out of the vacant-lands in 2004, housing affordab ility decreased rapidly (Figure 4-1). The increased affordability in the region appears to be the result of the fast rising incomes. The average annual increase in median incomes from 1995 to 200 was five 5.29% for the years 1995 to 2000. However, average annual in come increased just 1.47% for the years 2000 to 2004. Median incomes increased more than 26.45% from 1995 to 2000. This is more than four more times the rate of income increase from 2000 to 2004 when incomes appreciated 5.87%. As incomes rise, the pr oportion of household income dedicated to mortgage payments should decrease, making housing more affordable to home-owning households.
21 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 199520002004 YearAmount Vacant and (in thousands of acres) Housing opportunity index Figure 4-1. Comparison of vacant land a nd housing opportunity index in Broward County, Florida for the years 1995, 2000, and 2004 The data presented in Table 4-1 illustrates how the median price of a single family home increased as the amount of vacant, developable land decreased. This rise in prices became more pronounced as vacant-land became less available. The median price of a single-family home increased only 2 3.33% during the years 1995 through 2000. However, from 2000 to 2004 median single-fa mily home prices increased more than 55%. The appreciation experienced from 2000 to 2004 is more than double the appreciation realized over the years 1995 through 2000. Hous ing affordability tends to decrease as prices increase and incomes remain relatively the same. Although the diminishing amount of vacan t-land in Broward County can be a contributing factor to the rapi d increase in home prices in th e region, it is not the only factor. Next we will identify and analyze the supply-and-demand factors particular to Broward County that have also played a role in causing hosing prices to increase and, therefore, affordability to decrease.
22 Factors Influencing Supply-a nd-demand in Broward County Broward County is a unique place, given its naturally constrained geography that limits the amount of available land. However, there are other demand factors at work in Broward County, namely an ever-increasi ng population, tremendous economic growth, and historically low that must be identified and evaluated. Land Availability Broward County is bordered by the Atlantic Ocean to the east, FloridaÂ’s Everglades to the west, Miami-Dade County to the sout h, and Palm Beach County to the north. The County consists of 1,197 square miles of land; however, most of the land area (66%) is located in a water management area in the western portion of the County and is in its natural state. This area is the Everglad es Conservation Area and is not currently developable. This means that Broward C ounty only has 410 square miles of developable land (BCPSD, 2004a). Developable land, as described by the Broward County Planning Services Division, is any vacant-land free of environmental or policy constraints to development. As Broward County was approaching bu ild out in 2000, 15.77% (37,835 acres) of total land remained vacant and developable, primarily in the southwest and northwest portions of the County. Nearly 40% of th is vacant-land was consumed by 2004, leaving only 23,780 acres of vacant-land (10% of the County) (See Appendix C). The limit of Â“developableÂ” area is represen ted by the East Co ast Protection Levee which was completed in 1959. The Broward County Land Use Plan has designated the area west of the Levee as Â“ConservationÂ” a nd is to remain undeveloped. The purpose of this was two-fold: to protect a significant part of the Everglades, as well as, to protect the major source of water recharge from the Bis cayne Aquifer. Seven square miles east of
23 the levee have been purchased by the South Florida Water Management District in an effort to mitigate the effects of cyclical dr oughts and increase the water supply. This area will remain undeveloped and become part of the East Coast Buffer (BCPSD, 2004a). Economic Growth FloridaÂ’s economy tends to be one of the strongest in th e nation, creating a favorable environment with new jobs and growth opportunities. Broward County is considered a net exporter of labor, meaning th at the number of work ing adults living in the county surpasses the number of jobs. Broward CountyÂ’s labor force increased 1.4% in 2004 from the previous year to an aver age annual labor force of 917,342. However, employment increased 2.2% over the same timeframe and averaged 874,003 in 2004. Broward County continues to have a relativel y strong labor market producing a net gain of 27,711 jobs in 2004. Job growth is currently rising faster than population growth in Broward County, an indication of an expa nding economy (Bureau of Labor Statistics, 2006). The unemployment rate is psychologically important and can have a direct effect on consumer confidence. This measure is a lagging indicator and it is important to monitor in order to determine unemploymen t trends that may occur over time. The unemployment rate for Broward County in 2004 was 4.7%, which is lower than the national average of 5.5% during the same year. This indicates that Broward County is a favorable environment for the busin ess community. Broward CountyÂ’s 2004 unemployment rate was lower than it was in 2003 (5.9%), 2002 (6.4%), and 2001 (4.9%). These gradually decreasing unemployment figur es also suggest that the Broward County local economy is in a state of expansion. In fact, the construc tion industry grew 10% from 2003 to 2004 according to the Bur eau of Labor Statistics (2006).
24 Population The County population has increased stead ily from 5,135 in 1920 to more than 1.6 million in 2004. This dramatic increase has made Broward County the 15th largest county (in terms of population) in the United St ates, and the second larg est in the State of Florida, just behind MiamiDade (BCPSD, 2004). As th e population continues to increase, there will always be a demand fo r housing in Broward County. Housing units and future household demand will be a reflection of the cultural changes in diversity. Furthermore, the favorable business envir onment makes Broward County an attractive place for many corporations to use as a headquarters for business operations. The Planning Services Division of th e Broward County Department of Urban Planning and Redevelopment has constr ucted The Broward County Population Forecasting Model (herein called Model) in or der to evaluate the changes in population for the years 2000 Â– 2030. The Model assumes a 1.9% annual growth rate, a modest assumption compared to the 5.4% realized growth rate between 1970 and 2000, and predicts a forecasted overall population of 2.5 million by the year 2030 (BCPSD, 2002). The Model also projects an increase in di versity as minority populations continue to grow faster than that of the majority. Hispanics are predicted to see the largest increase over the thirty y ear period, eventually making up 32% of the population; 15% increase from the 17% realized as of y ear 2000. Black non-Hispanics are predicted to increase 4% over the same term from the current 20%. As of the year 2030, it is estimated that White non-Hispanics will comprise 33% of the population. A 25% decrease from the 58% realized in Census 2000. Other races incl uding Pacific Island, Native American, and Asian are estimated to increase 6% from their current status to 11% by 2030 (BCPSD, 2002).
25 The Model has two major components: net migration and natural increase. Net migration is the difference between the numbe r of people moving into the county and the number of people moving out. This number is further divided into domestic and international migration and is the most difficu lt data to record due to the lack of data available for people moving into and out of the county. Natural increase equals the number of births minus the number of deaths each year. Broward CountyÂ’s growth has primarily been the result of net migration. Natural increase was negative (deaths exceeded births) during the 1980Â’s. However, that factor is forecasted to change as natural increase wi ll become the dominant growth factor by 2019. It is expected that out-migr ation will offset in-migration, life expectancy will increase, and births will stabilize by the year 2030 (BCPSD, 2005). The accuracy of the Model has proven to be very consistent when compared to similar population projection models. The Broward Model seems to be a slightly conservative estimator in comparison to popula tion projections formulated by the State of FloridaÂ’s Bureau of Economic and Business Research and Woods & Poole, a private company specializing in economic and demogr aphic information. However, the lower numbers found in the Model are most likely due to the use of the most up-to-date local population figures (BCPSD, 2005). A determination of housing needs is t ypically based on population projections. Due to Broward CountyÂ’s increased multicultural population, future housing demand must be assessed with this di versity in mind. Although the aver age annual growth rate of households was 2.85% from 1990 to 2000, this gr owth has not been uniform amongst the diverse population.
26 In addition to immigration, changes in the age and family composition of households will contribute to changes in de mand for housing types. According to the 2003 American Community Survey, Browar d CountyÂ’s 1.7 million residents make up 684,447 households. Of these households, 62.66% are families. As defined by the United States Bureau of the Census (2006); a fa mily consists of two or more people, one of whom is the householder. The family members are related by birth, marriage, or adoption and reside in the same housing unit. A household is comprised of all individuals who occupy a housing unit rega rdless of relationship. A household may range from a person living alone to multiple, unrelated individuals or families living together. An increase in single person households , unmarried partners, single-parent families, and same-sex partnerships has caused a decrease in the growth of married couple households. The decreasing proportion of families with children, as well as the increasing number of singles and unmarried couples, will move housing demand to multifamily units, condominiums, and town homes. Interest Rates It is no question that low mo rtgage rates have been the driving force of the real estate boom. Mortgage rates represent a homeo wnerÂ’s cost to borrow money in order to purchase or refinance a home. Lower rates, or borrowing costs, allow buyers to afford higher priced homes. In cutting short-term interest rates to 46-year record lows, the Federal Reserve Board has encouraged Americans to borrow more. Increased homeownership, a desire for second home s in a favorable climate, and an underperforming stock market has put further pressure on demand to increase.
27 Low borrowing costs have encouraged individuals who are able to qualify for a mortgage to opt towards buying a home instead of renting. As people utilize the low cost of borrowing, the amount of first-time home buyers will increase. Homeownership in Broward County is currently at 70% (American Community Survey, 2003). Baby Boomers continue their desire for second homes and trade-up houses as they move into their pre-retirement years and have peak income and wealth. Additionally, a weak dollar attracts foreign investment in U.S. real estate. A study conducted by the National Association of Realtors and the Fl orida Association of Realtors found that 30.4% of sales in Broward and Miami-Dade counties consisted of foreign buyers. Reasons for buying real estate in Florida vari ed from wanting a permanent residence, a vacation home, or an investment property in a country with economic and political stability. Favorable currency exchange rates, particularly with the Euro, have made real estate in the United States mo re affordable (Navarro, 2005). The increased investment fervor in the Broward County housing market has created concerns of speculation. Drama tic price increases lead to in creased buyers (speculators), increased transactions, increased demand, and, eventually even higher prices. Â“Because of transaction costs, carrying costs, and tax considerations, professionals find it relatively difficult to take advantage of profit opportunities in this market . For these reasons, it is commonly casually asserted that the market fo r single-family homes is inefficient, and Â“bull marketsÂ” in housing (i.e., temporar y upward inertia in housing prices) are frequently allegedÂ” (Case and Shiller, 1989, p.125). Although, the exact amount of speculation is difficult to determine a nd beyond the scope of this paper, many condominium units in Broward County are beli eved to be bought by speculative buyers.
28 Economic Analysis The dramatic increase in housing prices from 2000Â–2004 can be evaluated using basic supply-and-demand economics. Tremendo us economic growth, combined with an ever increasing population and hist orically low interest rates, have fueled the increased demand for housing in recent years. However, this demand is for a fixed amount of housing units, representative of the lag in the capacity of construction to add new supply to the market. Housing prices in Browar d County continued to escalate because the demand for housing far outpaced the limited amo unt of new supply that could be added. In the short-run equilibrium, it is evident that transactions occur as willing sellers of existing properties find willing buyers. As land became scarcer inside the UGB, Broward County experienced increased competition for developable land. Broward CountyÂ’s housing market is currently ex periencing the short-run effect of economic growth. Â“Although inelastic in the short run, the supply of space is fairly elastic (price responsive) over longer time periodsÂ” (A rcher and Ling, 1997, p.12). Due to the fact that c onstruction, especially of large mu lti-family structures, is a time consuming process, a supply-and-demand imbalan ce will exist in the short run. In order to achieve long-run equilibrium, the supply of housing will have to increase. In the aforementioned case of Portland, Oregon; in order to increase supply, the UGB was shifted outward allowing more land to be deve loped. However, this is not the case in Broward County because the UGB is put in plac e by environmental restrictions and is not able to be expanded. How Has Construction Responded? The number of authorized housing permits i ssued provides insight into the type and amount of building activity that has occurred and will occur in the near future. Over
29 305,000 residential building permits were i ssued in Broward County between 1980 and 2003. Forty-seven percent were for multi-fam ily units while the remaining 53% were single-family units. Single-family construc tion was at it peak in 1994, when 10,700 units were built on land available in the western portions of Broward County (BCPSD, 2004b). However, this land is no longer available. A stringently drawn UGB direct ly constrains the future supply of developable land; however, a UGB does not directly constrain the future supply of housing units. In order to accommodate its ever-increasing populati on, Broward County has turned to higherdensity, multi-family construction. Du ring the years 2000 to 2004, 51,686 residential housing permits were issued. In 2000, 76.5& of the residential housing permits issued in Broward County were for single-family cons truction. However, in 2004 single-family housing accounted for only 54.9% of the re sidential housing pe rmits issued (See Appendix D). As supply becomes greater with the cons truction of additional housing units, the supply becomes more elastic. Ultimately, the additional supply provided by the new construction causes prices to level off. The market is now said to be in equilibrium. With the environmental constraints affixed in Broward County, urban sprawl is no longer an option. In order for Broward County to meet its ever-increasing demand and achieve long-range market equilibrium, it must turn to higher-density, mu ltifamily construction. The intent of higher density units is to u tilize land more efficiently as well as, spread the high cost of land be tween multiple occupants. As more supply is added to the existing housing stock in the form of multifamily structures, cost per unit should decrease. Phillips and Goods tein (2000, p.336) write that,
30 The trends toward higher land prices a nd increased densities theoretically pull housing prices in opposite directions. On the one hand, since land is one of the most significant inputs for housing, one would expect housing prices to be positively correlated with land prices. Howe ver, the factor substitution inherent in increased densities (the substitution of capital for land) may succeed in mitigating any increase in land prices. This occurs because consumers are generally willing to pay less for housing as density increases due to the fact that higher densities usually mean smaller yards, fewer open spaces, and less privacy. Thus, it is theoretically possible for increased land costs to be pa ssed to the consumer in the form of increasingly smaller lot sizes. It is important to note that as the amount of available la nd has decreased so to have the number of units being built. The total number of housing permits issued annually (single and multi) has decreased 27% (( 11,970-8,709)/11,970) from 2000 to 2004. This aberration is consistent with the 37% decreas e in vacant, developa ble land over the same time period (See Appendix D). Limitations of This Study In evaluating the data that was gathered for this study it is important to consider some of the limitations that were faced. Firs t of all, vacant-land data were collected by the BCPSD only for the years 1995, 2000, and 2004. The analysis data does not account for any spikes in land consumption that may have occurred in any single year. Additionally, the Housin g Opportunity Index only concen trates on what is happening to affordability at the median income level and tends to disguise what is happening to lower income families. The HOI proves to be more accurate in areas where household incomes are more closely clustered around the actual median. However, the Index becomes less accurate in areas where a wide distribution of incomes is experienced. It is important to mention that many individuals who are faced with housing affordability issues earn far below the median income and are not to tally represented by the HOI figures. Furthermore, it is important to note th at the Housing Price Index and Housing
31 Opportunity Index only take into account the prices of single-fa mily homes. In order to better evaluate the growing issue of housi ng affordability in Broward County, it is important to evaluate price changes acro ss multiple housing types. Lastly, although mentioned and explained, this study does not account for the im pact of interest rates on affordable housing. Next, we will provide a summary of the study and show that the current supplyand-demand factors will continue into the future. We will also offer recommendations for future study.
32 CHAPTER 5 CONCLUSIONS AND RECOMMENDATIONS The data analysis demonstrates that as the price of single-family homes increased and housing affordability decreased as amount of available land in Broward County became scarcer. However, it is difficult to dete rmine from the data analysis that the mere presence of an UGB is the sole cause of house-price appreciation in the region. Other economic factors, namely population growth, economic growth, and low interest rates have all contributed to the increas ed demand for housing in the area. Much can be determined about the effect of a UGB on housing prices in Broward County by reflecting back on DownsÂ’ previ ous research. According to Downs, Â“containment programs such as an UGB do not inevitably influence a regionÂ’s rate of housing price increase, but are most likely to do so when combined with strong surges in local incomes or employment Â– and ther efore in housing dema ndÂ” (Downs, 2002, p.26). A portion of the rapid appreci ation in home prices in Broward County over the years 2000Â–2004 may be the result of the overwhelmi ngly rapid growth experienced in the region. DownsÂ’ findings also imply that, Â“if a region with a tightly drawn and strongly enforced UGB is enjoying great prosperity Â– including high and fast-rising incomes Â– and encounters rapid increases in housing prices, th is region should seri ously consider adding more developable land to the territory inside its UGB to improve affordabilityÂ” (Downs, 2002, p.29). However, this is not capable of happening in Broward County. An expansion of the Urban-growth boundary in Broward County could have detrimental
33 effects on the water supply for the entire South Florida area. Although Broward County cannot create more land suitable for development, it has been forced to increase densities in the form of vertical construction. As Broward County approaches build-out, it must look for new ways to accommodate its ever -increasing population. It has been shown from residential housing permit data that th e added supply will come in the form of multi-family construction. The Federal Reserve has begun to increase inte rest rates. The effect of this will likely be a decrease in housing demand as it becomes more expensive to borrow money, and therefore more expensive to purchase a house. This will c ool off some of the demand in the form of investment propert y and second homes. However, even as Broward County approaches build-out, the population is predicte d to continue to increase. This does not bode well for affo rdable housing. The historical rate of population growth is predicted to slow as Broward County approaches build-out of the vacant-lands within the containment boundar y. However, the CountyÂ’s population is anticipated to increase by about 925,000 residents to a total population of over 2.5 million by 2030, due to natural increase and continued migration patterns. There is not enough vacant-land to accommodate anticipated growth as shown in analysis of the Broward County Land Use Plan and vacant-lands availa ble for development. Broward County is forecasted to reach build out of the availabl e, residential land by 2015, given the current rates of development (BCPSD, 2004). As the population continues to grow a nd developable land becomes unavailable, the number of multifamily structures will have to increase. Vacant-land available for lower density, single-family structures will be scarce. Future development will have to be
34 located on infill and redevelopment sites. As this redevelopment occurs, new, higher density buildings will replace older structures. Broward County has seen a tremendous amount of condominiums being constructed in recent years. Condominiums are a great source of high-density housing for overpopulated areas. Broward County is quickly running out of raw land suitable for new suburban development. However, the demand for housi ng in Broward County is at an all-time high, and growing. With a constrained s upply, and demand conditions predicted to remain strong, affordability issues will con tinue. As affordable housing does not offer good returns for investors and developers, it is left up to the federal, state, and local governments to provide adequate housing. Â“Currently, the Broward County Land Use Plan has insufficient capacity on undeveloped parcels to provide the number of housing units needed to accommodate projected futu re growth. In planning for the future, Broward County can be pro-active or respons ive. Planning to accommodate growth by redevelopment and public investment is pr eferable to addressing the inevitable overcrowding, blight and conge stion that will result from a laissez-faire responseÂ” (BCPSD, 2004, Section III.1, p.1). Recommendations for future study should focus on the relationships between house-price appreciation and ot her demand factors particular to the Broward County area, such as low interest ra tes and economic growth.
35 APPENDIX A HOUSING PRICE INDEX Using data provided by Freddie Mac a nd Fannie Mae, the Office of Federal Housing Oversight Enterprise (OFHOE) has created the Housing Pr ice Index (HPI) to track the movement of single-family home pri ces in order to indicat e trends in different geographical areas. HPI is a measure of the price changes in single-family homes. The HPI serves as a timely, accurate indicator of house-price trends at various geographic levels (OFHEO, 2005). The HPI, a weighted repeat sales index, is updated quarterly and measures average price changes in refinancings or repeat sales of the same properties. Information is gathered from repeat mortgage transactions on single-family properties whose mortgages have been securitized or purchased by Freddie Mac or Fannie Mae beginning first quarter, 1975. (OFHEO, 2005) Table A-1 displays annualized HPI data for the Fort Lauderdale-Pompano BeachDeerfield Beach MSA for the years 1001-2005. Annual and 5-year% change in HPI are also displayed.
36 Table A-1. Housing price index for the Fort Lauderdale-Pompano Beach-Deerfield Beach Metropolitan Statistical Area, first quarter 1991-first quarter, 2005 Year HPI 1-year% change 5-year% change 1991 94.055 1992 96.19 2.27 1993 98.448 2.35 1994 100.18 1.76 1995 102.14 1.95 1996 104.44 2.25 11.04 1997 106.44 1.92 10.65 1998 111.41 4.67 13.16 1999 114.87 3.11 14.67 2000 124.07 8.00 21.47 2001 139.95 12.80 34.00 2002 159.35 13.87 49.71 2003 180.33 13.16 61.86 2004 216.07 19.82 88.09 2005* 244.94* 13.36* 97.43* *data was collected only for the first quarter of 2005
37 APPENDIX B HOUSING OPPORTUNITY INDEX The information displayed in data sets B-1, B-2, and B-3 is from the NAHB-Wells Fargo Housing Opportunity Index (NAHB, 2006) a nd displays housing affordability data for the Fort Lauderdale-Pompano Beach-Deerfield B each Metropolitan Statistical Area. The NAHB publishes HOI data on a quarterly basis. Only information for the years 1995, 2000, and 2004 was used because these were the only years that vacant land data was available. Median price and median income data is displayed in thousands of dollars. Table B-1. Median price (in thousands of dollars), housing opportunity index, and median income (in thousands of dollars) for Broward County, Florida for 1995 Data Q1 Q2 Q3 Q4 Annual Median price 95.0 96.0 100.0 98.0 97.3 Housing opportunity index 68.6 69.1 66.9 69.1 68.4 Median income 43.1 43.1 43.1 43.1 43.1 Table B-2. Median price (in thousands of dollars), housing opportunity index, and median income (in thousands of dollars) for Broward County, Florida for 2000 Data Q1 Q2 Q3 Q4 Annual Median price 113.0 118.0 125.0 124.0 120.0 Housing opportunity index 74.8 71.5 68.3 70.4 71.3 Median income 54.5 54.5 54.5 54.5 54.5 Table B-3. Median price (in thousands of dollars), housing opportunity index, and median income (in thousands of dollars) for Broward County, Florida for 2004 Data Q1 Q2 Q3 Q4 Annual Median price 165.0 183.0 198.0 198.0 186.0 Housing opportunity index 60.1 53.1 47.8 47.5 52.1 Median income 57.7 57.7 57.7 57.7 57.7
38 APPENDIX C VACANT LAND BY LAND US E DESCRIPTION 2000-2004 The data presented in Table C-1 were obtained from Victoria Morrow, Graphic Information Systems (GIS) Manager for the Broward County Urban Planning and Redevelopment Planning Services Division. Vacant land data sets were created to forecast future development and used specifi cally to estimate employment and population growth related to transit oriented devel opment. The data for 2004 was created by Broward County GIS staff who updated the da ta collected in 2000 by an external consultant of the BCPSD.
39 Table C-1. Vacant Land Inventory by La nd Use Designation for Broward County, Florida for the Years 2000 and 2004 (BCPSD, 2005) Land Use Description County Total Vacant 2004 Vacant 2000 Consumed between 2000 and 2004 acres acres % of County acres acres % of 2000 Total 239,892 23,780 10% 37,835 14,055 37% Rural Ranches 5,031 1,533 30% 1,795 262 15% Rural Estates 1,254 479 38% 509 30 6% Estate-1 Residential 15,981 5,018 31% 6,649 1,630 25% Low-2 Residential 3,030 338 11% 762 425 56% Low-3 Residential 17,943 2,052 11% 3,942 1,890 48% Low-5 Residential 41,885 1,068 3% 2,201 1,133 51% Residential in Dashed-Line Area 30,886 1,473 5% 4,552 3,079 68% Low-Medium10 Residential 11,997 951 8% 1,248 296 24% Medium16 Residential 10,270 479 5% 714 236 33% Medium-High25 Residential 4,305 109 3% 216 107 49% High -50 Residential 1,197 34 3% 81 48 59% Office Park 964 282 29% 422 140 33% Commercial 19,127 2,887 15% 4,122 1,234 30% Employment Center-High 1,927 445 23% 742 297 40% Employment Center-Low 63 4 7% 4 0 0% Industrial 14,069 3,092 22% 4,492 1,400 31% Community Facilities 5,884 621 11% 835 214 26% Regional Activity Center 6,096 1,180 19% 1,630 450 28% Local Activity Center 564 78 14% 88 11 12% Conservation Natural Reservations 5,570 17 0% 30 13 44% Recreation and Open Space 10,149 62 1% 75 13 17% Commercial Recreation 6,756 73 1% 79 5 7% Agricultural 10,312 965 9% 2,000 1,035 52% Transportation 12,303 379 3% 467 89 19% Utilities 1,765 124 7% 142 18 12% Electrical Generation Facilities 563 36 6% 36 0 0% Water 18,943 Con Reserve Water Supply Areas 80 Right of Way 14,215
40 APPENDIX D BUILDING PERMITS AND VACANT LAND Table D-1. Residential building permits and vacant land data for Broward County for the years 2000-2004 Year 2000 2001 2002 2003 2004 Vacant Land (in acres) 37,835 34,321* 30,808* 27,294* 23,780 Single Family Permits 9,160 8,275 5,705 3,880 4,784 Multi-family Permits 2,810 2,486 6,323 4,338 3,925 Total Housing Permits 11,970 10,761 12,028 8,218 8,709 *Data values estimated linearly using vacant land data for 2000 and 2004 provided by the BCPSD. Source: BCPSD and United Stat es Bureau of the Census.
41 LIST OF REFERENCES American Community Survey Office. Â“A CS 2003 Multi-year Profile for Broward County.Â” 2003 American Community Survey . U.S. Census Bureau. Last revised June 28, 2005. Assessed April 16, 2006. http://www.census.gov/acs/www/Products /Profiles/Chg/2003/ACS/FL.htm , American Community Survey Office. Â“Bro ward County, Florida Â– Selected Housing Characteristics, 2004.Â” 2004 American Community Survey , U.S. Census Bureau. Assessed April 16, 2006. http://factfinder.census .gov/servlet/MYPTable?_bm=y&qr_name=ACS_2004_EST_G00_MYP4_15&-geo_id=05000US12011&ds_name =. Archer, Wayne and Ling, David. Â“The Thr ee Dimensions of Real Estate Markets: Linking Space, Capital, and Property Markets.Â” Real Estate Finance , Fall 1997, p.7-14. Broward County Planning Services Division. Â“Broward County P opulation Forecasting Model, Update 2005.Â” Broward C ounty Office of Urban Planning and Redevelopment (BCOUPR), May 2005a. http://www.broward.org/plannings ervices/2005_proj ection_update.pdf Broward County Planning Services Division. Â“Rental Housing in Broward County.Â” Broward-by-the-Numbers , No. 33. BCOUPR, April 2005b. http://www.broward.org/pl anningservices/bbtn33.pdf . Broward County Planning Services Division. Â“Evaluation and Appraisal Report (EAR) 2004.Â” BCOUPR February 24, 2004a. Broward County Planning Services Division. Â“Residential Building Permits in Broward County.Â” Broward-by-the-Numbers , No. 23. BCOUPR, June 2004b. http://www.broward.org/pl anningservices/bbtn23.pdf . Broward County Planning Services Division. Â“Affording Housing in Broward County.Â” Broward-by-the-Numbers . BCOUPR, December, 2003a. http://www.broward.org/pl anningservices/bbtn17.pdf . Broward County Planning Services Divisi on. Â“Quick Facts for Broward County.Â” Broward-by-the-Numbers , No. 2 (rev.). BCOUPR, August 2003b. http://www.broward.org/pl anningservices/bbtn2.pdf .
42 Broward County Planning Services Divisi on. Â“Population Proj ections for Broward County.Â” Broward-by-the-Numbers , No. 3. BCOUPR, September 2002. http://www.broward.org/pl anningservices/bbtn3.pdf . Case, Karl E. and Shiller, Robert J. Â“The Efficiency of the Market for Single-Family Homes.Â” The American Economic Review , Vol. 79, No.1, March 1989, p. 125-137. Clifton, Alexandra Navarro. Â“Foreign Inve stors Scoop Up Real Estate for Many, Homes in S. Florida are a Hot Commodity.Â” Sun-Sentinel . Fort Lauderdale, FL. July 15, 2005, p. 1A. Downs, Anthony. Â“Have Housing Prices Rise n Faster in Portland than Elsewhere?Â” Housing Policy Debate, Vol. 13, Issue 1. Fanni e Mae Foundation 2002, p. 7-31. Fischel, William A. Â“Comment on Anthony Do wnsÂ’s Â‘Have Housing Prices Risen Faster in Portland Than Elsewhere?Â’Â” Housing Policy Debate , Vol. 13, Issue 1. Fannie Mae Foundation, 2002. Galvez, J., Gatzlaff, D., Martinez, J., Mu rray, M., Nguyen, D., OÂ’Dell, W., Smith, M., and White, D. Â“The State of FloridaÂ’ s Housing 2003.Â” Florida Housing Data Clearinghouse, Shimberg Center for Afford able Housing at the University of Florida, February 2004. Goodstein, Eban and Phillips, Justin. Â“G rowth Management and Housing Prices: The Case of Portland Oregon.Â” Contemporary Economic Policy , Vol. 18, No. 3. July 2000, p. 334-344 (ISSN 1074-3529). Joint Center for Housing Studies of Harvard University. Â“The State of the NationÂ’s Housing 2005.Â” President and Fello ws of Harvard University, 2005. http://www.jchs.harvard.edu/publ ications/markets/son2005/son2005_bw.pdf . Ling, David and Wayne, Archer. Â“Real Estate Principles A Value Approach.Â” New York, NY. McGraw -Hill/Irwin 2005. Metro. Land Use Planning, Â“Urban Growth Boundary.Â” Last updated January 28, 2006. Assessed April 16, 2006. http://www.metro-region.org/article.cfm?articleID=277 . National Association of Home Builders. Â“NAHB/Wells Fargo Housing Opportunity Index: Complete History by Metropolitan Area (1991 Â– Current).Â” Assessed March 29, 2006. http://www.nahb.org/page.as px/category/sectionID=135 Office of Federal Housing Enterprise Oversight . Â“U.S. House Prices Continue to Rise Rapidly.Â” OFHEO, June 1, 2005. http://www.ofheo.gov/media/pdf/1q05hpi.pdf . Professional Research Consultants, Inc. Â“2004 PRC Quality of Life Assessment: Broward County, Florida.Â” Community Report Prepared for The Coordinating Council of Broward County , 2004. http://www.sfrpc.com/ftp/pub/ccb/PRC2004Report.pdf .
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44 BIOGRAPHICAL SKETCH Toby William Griffin Lawrence was born to Keith and Donna Lawrence on February 7, 1980 in Fort Lauderdale, Florida. He and his younger brother, Keith II, were raised in Broward County, Florida. Toby graduated from St. Thomas Aquinas High School in 1998 where he lettered in two s ports, football and soccer. After graduation, Toby decided to continue his education at the University of Florida. While majoring in Business Administration as an undergraduate, Toby was a member of the University of Florida Rugby Football Club and was team capta in for 3 years. Toby was involved in the construction field for most of his adolescent life working various jobs as a labor assistant. During college, Toby pursued many different majo rs until he settled on business. Toby is grateful for his decision to retu rn to the construction field to pursue is post baccalaureate degree at the University of FloridaÂ’s M. E. Rinker School of Building Construction. For the past year, Toby has been worki ng as a project engi neer at Moss and Associates, LLC of Fort Laude rdale, FL. He is working at the Boca Raton Resort and Club in Boca Raton, Florida. His current project is a 5-year-long renovation and construction project for the private invest ment company, The Blackstone Group. After completing his Master of Science in Buildi ng Construction degree, Toby will retain his position at the company.