March 29, 2024

People and Projects

Workforce Housing: Back to Basics

A slow market is turning builders to workforce housing.

Richard Westlund | 10/1/2007

Units at 1010 Central in St. Petersburg average $220,000.

In downtown Miami, The Related Group is planning Loft 4, a 404-condominium development with prices starting at $140,000. In downtown St. Petersburg, Miles Development Partners recently completed a 114-unit project, 1010 Central, with an average price of $220,000. And in suburban Polk County, Unity Homes is planning 4,000 homes priced from $129,000.

Two years after the collapse of Florida’s investor-fueled residential real estate boom, developers and builders are focusing on workforce housing ranging from $130,000 to $300,000. Those prices allow professionals with salaries in the $40,000-to-$60,000 range to become homeowners — even in today’s tighter credit market.

In Florida, median housing prices rose 82% from 2000 to 2005, while incomes rose only 9%, according to the Urban Land Institute. At the same time, cities were losing rental units to condo conversions; Tampa and Orlando alone lost more than 50,000 affordable rental units due to condo conversions, notes Steve Webster, co-founder of Florida Workforce Housing Network, a non-profit organization.

The result is an affordable housing crunch statewide, especially in densely populated regions like south Florida.

In the past year, though, housing prices have been declining, and some of the state’s biggest builders, including Lennar, KB Home, and D.R. Horton, have launched affordable housing strategies. “As Florida mortgage foreclosures soar, opportunities for lower-cost housing are imminent,” Webster says. “Will that be enough to solve the problem? I doubt it.”

In Broward, for instance, the median household income of $58,400 is enough to qualify for a $200,000 mortgage, but the median single-family home price in June was $382,000.

“Many builders have forgotten how to build houses for the affordable workforce,” says George Kalivretenos, president of Unity Homes in Orlando. “In the past, they could just raise prices. But in today’s market, that’s not an option.”

In urban areas, government incentives are vital to developing lower-priced housing, says Jason Perry, Miles’ vice president of development. The Atlanta-based developer will receive a rebate on a portion of Jacksonville city taxes after building 270 workforce rental units in the first phase of its 12.5-acre Brooklyn Park project.

“People want to live close to work, but high land costs make it hard to deliver affordable product,” says Perry. “You have to be very conscious of your design and use the land to its maximum potential. But providing workforce housing in the urban core is the real challenge that Florida faces today.”

Tags: North Central, Housing/Construction

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