If you are like me, your head is spinning with all the talk about affordable housing. As recently as five years ago, most of us, including those in the housing industry, had never heard of community housing trust funds, land trusts or inclusionary zoning. Now all three, and many more ideas with catchy names, are being considered to alleviate the pent up demand for workforce housing in Sarasota County. It’s easy to be confused. We can’t even decide on a name – workforce housing, community housing, attainable housing, affordable housing. Take your pick.
When faced with a complicated issue, I try to simplify it into its most understandable components by working through simple questions and obvious facts. For affordable housing (what I’m going to call it), the bottom line is we simply do not have enough of it. Why? Because we aren’t building any.
Until about eight years ago, even construction workers could afford the houses and condos they were building in Sarasota County. Building both high-end and low-end homes had been continuous since John Ringling was building his $1.5 million bay front Ca de Zan and my grandfather was building simple frame homes in the Arlington Park area. The need for affordable homes hasn’t ended, even if we aren’t building them. If anything, the need has increased.
If there’s a demand for affordable homes, why did we stop building them? I suggest a very simple answer – the market. Free markets, the hallmark of the American economy, tend to take the path of higher profits and least resistance. And so does each of us. Do you wake up in the morning and say to yourself, “Today, I’m going to find the hardest work for the least pay?” Of course not. We strive for efficiencies, profit and ease, to better enjoy our lives and support our families. And so does the market, because we are the market.
If you were a homebuilder and you had a choice of building a $500,000 home with a high-profit margin for a cash buyer, or building a $125,000 home with a low-profit margin for a buyer who has credit issues and needs a loan, which house are you going to build? There are no incentives in Sarasota’s real estate market to build affordable homes, but many disincentives.
Some would suggest that impact fees, land supply, protection for environmentally sensitive land and density create a shortage of affordable housing. But the facts suggest otherwise.
If impact fees ($5,400 per new home, excluding utilities) were completely eliminated, the price of a new home – the only homes that pay impact fees – would only drop to $494,600 from $500,000. This is about as effective as removing the light bulb in a refrigerator to lower your electric bill. Even without impact fees, the market quickly would drive the price back where it was.
The supply of developable land also is blamed for our affordable housing shortage. The argument is that if you create more supply, prices will fall. But in reality, this hasn’t been the case. Affordable housing is just as much of a problem in Sarasota County as it is in counties such as Lee and Collier where huge tracts of agricultural and environmental land has been approved for massive, high-end development projects. Despite all of the additional supply of developable land, the affordable housing crisis in those counties has worsened.
North Port is a great example. The city not only has 40,000 existing vacant lots, North Port dramatically expanded the availability of developable land by annexing more than 15,000 acres to support another 35,000 lots. Yet North Port is experiencing the most rapid price increases in the city’s history. While the supply of developable land has increased at an unprecedented rate, home prices and taxes have blasted through the roof.
By the time enough developable land is created to effectively offset today’s unprecedented demands and bring prices down into the affordable range, the infrastructure budgets required to service that supply will be bankrupt and today’s quality of life in Sarasota will be a distant memory. The demand is that great!
Most communities throughout the nation with affordable housing shortages have no environmental land protection programs. Even with all of Sarasota County’s existing and proposed land protection programs, there would still be enough developable land to accommodate 10 times our affordable housing needs – if the market desired. But it hasn’t. Several parcels of environmental and potential park lands were recently lost to development – expensive luxury development, and not one single affordable housing unit was built!
Protecting the environment for future generations now, while it’s still available, is hardly an impediment to supplying land for affordable housing. There are no legitimate connections, only self-serving excuses from those who want the land for development and misunderstandings from others.
The density argument alone, which sounds superficially logical, also belies the facts. Affordable housing shortages are notorious in many of the most densely populated areas of the nation, the state and the county. And you wouldn’t want to live in the densely populated areas where this fact isn’t the rule. Downtown Sarasota, where densities have increased dramatically, provides a recent and classic example. Compare the price lists (market values) before and after the additional density. Additional densities have resulted in replacing affordable small homes and apartments with high-end luxury condominiums.
There’s another significant contribution to the affordable housing dilemma. For a large portion of our workforce, the ability to pay monthly housing expenses has eroded exponentially. The rise in housing costs is half of the equation, but inadequate wages are the other half. If wages had kept pace and were still commensurate with the cost of housing, affordable housing would be a fraction of the issue it is today.
Sarasota County and other communities throughout the nation have shortages of affordable housing because we live in a community where buyers with wealth want to live and they are willing to pay to get here. The market is responding to an extraordinary demand for higher priced homes. The lack of affordable housing isn’t the fault of government, home builders, developers or luxury home buyers. Likewise, the solution can’t be the sole responsibility one of these groups either. We got into this mess as a community, and that’s the only way we can get out of it.