How to solve Florida's large-scale affordable housing crisis

Mike Vogel | 9/25/2020

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It raises the question: What guarantee is there that developers — once liberated from mandates — will add affordable housing rather than pricier units or vacation rentals? The short answer: None.

Staley, the FSU professor, says if there’s demand, it means the supply hasn’t been provided before. He also refers to what economists call “filtering” — as people move up market, they leave behind dwellings that less well-off people can afford.

In any case, the vacation company abandoned Frey in the pandemic. No rent came in April or May. He hired a leasing broker to rent units by conventional 12-month terms and by early August was fully leased. Rents are mid-market for that part of Miami, averaging $1,850 per month — or in the low $2-per-square-foot range.

On a lot next door to his row houses another small developer is building a small-scale, multi-family building. Around the corner, a third developer, Misha Gurevich, this summer began leasing 32 bedrooms in a three-story, 12-unit co-living building he and his family’s Propolis firm constructed on a 5,000-sq.-ft. lot. He says relaxing of parking requirements made it possible. Rents per bedroom range from $875 to $1,075 a month. Each bedroom has its own bathroom, but unit tenants share a kitchen and Iiving room.

“It’s not for everyone,” he says. “The idea was always to produce a product that was new, nice and affordable.” Early tenants have been young professionals relocating to Florida. Gurevich has seven more sites in the pipeline, all small buildings.

Frey hopes the next 10 years will see contractors and small developers taking vacant lots and old rentals “slum-lorded to death” and in their place constructing the supply to meet Miami’s need for housing.

“It’s not scarce because developers corner the market on housing like OPEC and are only letting a few barrels out at a time,” Frey says. “Housing prices are high because of scarcity, and scarcity is caused by the government.”

Affordability Snapshot

Tampa Bay

Tampa Bay has 120,848 low-income households (making 60% of area median income or less) who pay more than 40% of their income on rent and utilities.
Tampa Bay added 115,000 rental units from 2000 to 2017 — only 955 of them had rented for $1,000 or less. Only 44% of all rental units in Tampa Bay rent for $1,000 or less, down from 63% in 2000.
Renters under 55 increased by 74,506 households. Most growth in renting and home ownership came from those 55 and older. Under-55 homeowners fell by 40,242.

Northeast Florida

Northeast Florida has 54,683 low-income households that pay more than 40% of their income on rent and utilities.
Northeast Florida added 59,000 rental units from 2000 to 2017 — only 8% rented for $1,000 or less. Only 47% of all rental units rented for $1,000 or less, down from 64% in 2000.
Renters under 55 increased by 37,315 households. Most growth in renting and home ownership came from those 55 and older. The number of under-55 homeowners fell by 16,447.

South Florida

South Florida has 276,630 low-income households who pay more than 40% of their income on rent and utilities.
South Florida added 163,000 rental units from 2000 to 2017 — but lost units renting for under $1,000. Only 27% of rental units in South Florida rent for less than $1,000, down from nearly half in 2000.
Renters under 55 increased by 108,730 households. Most growth in renting and home ownership came from those 55 and older. The number of under-55 homeowners fell by 153,661.

Central Florida

The Orlando area has 98,654 low-income households who pay more than 40% of their income on rent and utilities.
The Orlando area added 104,000 rental units from 2000 to 2017 — only 10,672 rented for $1,000 or less. Only 31% of rental units in the Orlando area rent for $1,000 or less, down from 44% in 2000.
Renters under 55 increased by 77,585 households. Most growth in renting and homeownership came from those 55 and older. The number of under-55 homeowners fell by 68.

The State

From 2000 to 2017, Florida added 718,166 units with gross rent higher than $1,000 but lost 43,956 units renting for $1,000 or less.
There are only 23 affordable and available rentals for every 100 low-income renter households making less than 30% of area median income.

The ‘Missing Middle’

How to Create More Affordable Housing

A growing number of free-market advocates, government planners and elected leaders believe some government land-use laws are restricting growth of the housing supply by blocking construction of duplexes, triplexes, fourplexes, small homes, granny flats and courtyard apartments. Reducing regulation would create a greater variety of housing to meet a variety of needs at prices people can afford and contribute to more mixed-income neighborhoods, they say. Free-market advocates and governments around Florida says these changes could increase the affordable housing supply:

Mix Uses — Broaden the planning view beyond the single-family house and single-family neighborhoods as the foundation. Allow small scale, multifamily developments within walkable distances to shopping and work.
Upzoning — Allow more than one unit per lot. It lowers the per-unit development cost and the cost to buy or rent.
Combine Parcels/Flexible Lot Configurations — Combining lots makes denser development possible. Flexibility opens small or irregular-shaped properties to housing construction.
Co-Housing — Enable co-housing in which tenants have their own bedrooms but share common areas.
Reduce Required Parking —The savings can be devoted to building more units on the site or lowering the cost to renters or buyers.
Allow Accessory Dwelling Units — Granny flats, mother-in-law apartments and garage apartments add to the housing supply, let property owners get more from their land and lower the cost of ownership.
Requirements — Reducing required minimum living areas would enable development on smaller sites, which would lower costs.

James Madison

Cities that want to increase affordable housing need to lower the cost to build, the James Madison Institute concluded in a report last year on the effect of impact fees and other regulations on housing supply.

The authors said Florida — pre-pandemic — grows by nearly 115,000 households a year but adds just 57,952 housing unit annually. Failing to keep up the supply drives up prices. The report said impact fees to fund development of schools, parks and roads sometimes aren’t transparent in price or purpose — it’s not clear the fees are anything other than a general tax rather than earmarked to pay for a school or park benefiting new development. The fees also can be regressive, impacting smaller or lower cost homes and buyers disproportionately.

The report found that permitting delays drive up costs — averaging 5.9% of the selling price of a finished lot and 1.7% of selling price of a finished home, or $3,300 to $6,900 per house in the Bradenton, Fort Myers and Sarasota metro area, the focus of the report.

Read more in Florida Trend's October issue.
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