Florida Trend | Florida's Business Authority


Until the run-up in home prices of the past several years, policy discussions involving construction of housing for lowerincome people occurred pretty much out of the mainstream, among do-gooders, bureaucrats and the few developers who specialized in "affordable housing."

But with the growth in median home prices in Florida since 2002 far outstripping growth in median income, the picture of who's low income has become much fuzzier. Many traditional middle-class occupations that produce enough income to support a family have become low income in terms of their home-purchasing power -- even in the face of cheap mortgage money and lax lending standards.

That phenomenon has pushed affordability issues into the mainstream. And it's made them a concern for the business community, which has tried to legitimize the issue, in part with some linguistic sleight of hand: To distinguish middle-class earners who can't afford homes from the poor who can't afford homes, terms like "workforce housing" or "attainable housing" have come into parlance. And the advocacy for "workforce housing" policies is inevitably accompanied, mantra-like, by laments over the inability of "teachers, firefighters and police officers" to afford homes.

Everywhere in Florida, communities are discussing or implementing policies to help those teachers, firefighters and police officers. At one end of the policy spectrum are tweaks in the regulatory system: Relaxing zoning or density rules, for example, so a developer can build enough units on a parcel to make the effort as profitable as building fewer, more expensive units. Another variation: Permission to build a development comes with a requirement that the developers include some percentage of "affordable" units. Tallahassee, for instance, now requires that 10% of the homes in developments of 50 units or more be priced less than $160,000.

The problem with those policies is that, absent some kind of contractual restrictions, they'll benefit only one generation of buyers. The price of the mandated low-cost unit will tend to rise to market rates, the firefighter or teacher who got it first will cash in on the appreciation and we're back to "workforce housing" crisis one sale later.

At the other end of the spectrum is the community housing trust approach, which has some traction in the Pensacola area and a number of other communities. Under the trust approach, a municipality or non-profit acquires land, and a developer builds homes on it. Buyers purchase only the home; the land remains in the hands of the non-profit. In some cases, contracts restrict the percentage of appreciation the "owner" can realize upon resale. This approach has the benefit of both creating new housing and keeping the homes affordable over time. A potential problem is that developing trust housing in big-parcel chunks could create "workforce housing" enclaves that, immune from market pressures, may tend to decline. Owners of the trust homes also won't ever realize the same windfalls that come to their neighbors if home values in the area appreciate rapidly.

In the middle of the spectrum is a host of subsidies, grants, loans and other financial shuffles, many targeted specifically at firefighters, teachers and police officers.

Absent in the "workforce housing" discussion are a number of considerations that would make it more honest and more constructive. One is that Florida's long history of cheap land -- and the recent history of cheap and easy mortgage money -- has created expectations that will have to evolve. Not so long ago, most people lived where they could afford until they saved enough to afford where they wanted to live. Today, few save, and many expect more immediate gratification of their preferences, housing and otherwise. Witness the willingness of buyers to gamble on adjustable rate and interest-only mortgages, which in the Sarasota-Bradenton area rose from about 14.5% of total new mortgages and refinances in 2003 to nearly 28% in 2005. Cheap money and lax lending standards have boosted homeownership rates, but they've also helped bid up home prices.

Another consideration in "workforce housing" is race and how segregated living patterns reduce the count of homes that could qualify as workforce housing. My own general neighborhood here in Pinellas County, which is middle class, safe and racially mixed, includes a number of homes that would be affordable for many police officers, teachers or firefighters. Many live there now. I know, however, that very few real estate brokers will show those homes to, for example, a teacher moving in from out of the area -- based on the assumption that the prospective buyer might consider the area "undesirable." I wonder how many similar neighborhoods there are around Florida for which the same could be said -- and therefore how much the actual supply of "workforce housing" is undercounted.

Yet another is that the business community, in embracing workforce housing issues, isn't really talking about housing for firefighters and teachers. Business interests ought to acknowledge that this discussion is really about affordable housing for the salespeople, support workers, technicians and the other employees who make up the bulk of the workforce -- less essential occupations than the first group by some measure but no less deserving of housing within their means.

What may be most unsettling to the business community in the workforce housing issue is the specter of a bigger issue that's been nibbling at the American economy for several decades now: The growing income inequality between the haves and have-nots and the accompanying erosion and redefinition of what we view as middle class. It's no coincidence that the workforce housing issue is most pressing in counties like Sarasota, Collier and Palm Beach that have had the biggest gaps between average income and average wages -- between those who live off their assets and those who live off their paychecks.
More broadly, what does it mean for Florida that, in the middle of a booming economy generating plenty of jobs, traditional middle-class people either can't afford a home or have to spend more than half of their incomes to put a roof over their heads? How does that fit our definition of economic success?