Florida is facing a housing crisis.
When the Public Opinion Research Lab at the University of North Florida asked state residents what “the most important problem facing Florida today” was, 25% said “housing costs” in their March 2023 survey. Housing costs outstripped other concerns by significant margins, including the next highest vote-getters, the economy (17%), education (12%), and immigration (10%). The burden of high housing costs was particularly acute among Black and Hispanic Floridians and independent voters. Moreover, well over a third of young adults under 35 years of age expressed housing costs as the most pressing issue facing Floridians.
A look at recent Federal Reserve Bank of St. Louis housing statistics, represented in Figure 1, shows why. Floridians were paying under $300,000 median price for a home back in 2015. Fast forward to 2022, the typical listing price was over $450,000 median price.4 Meanwhile, median household income for Floridians has fallen from $66,856 (2019-prior to the pandemic) to $59,734 (in 2021, the most recent year available).
For the typical household, homeownership is an increasingly distant aspiration. Due to declining incomes, the median home price a Floridian can afford fell from $267,600 in 2017 to $238,800 in 2021, even though home prices increased. According to the National Association of Realtors, single-family homes in the Florida metropolitan areas of Naples, Miami-Fort Lauderdale, Sarasota-Bradenton, Orlando Kissimmee, Cape Coral-Fort Myers, Fort Walton Beach–Destin, Port St. Lucie, and Tampa-St. Petersburg-Clearwater is less affordable than the national average.
What is driving these dramatic increases in prices and resulting reductions in housing affordability? As in all markets, prices reflect supply and demand. When demand increases, and supply does not keep pace, prices go up. This dynamic is in play in Florida’s housing market with a twist: regulation at the local level, specifically zoning, has created “stickiness” in the ability of housing markets to adjust to shifts and changes in demand. An individual or young family moving to the state may not need the same type of housing as someone who has established themselves and is now ready to “trade up” to a different home.
Urban professionals often want different types of housing in different types of neighborhoods than families with young (or older) children. Moreover, family dynamics and housing needs are changing as birthrates decline. According to a 2022 Legislative Brief from the Office of Economic and Demographic Research, Florida’s birth rate was over 11% in 2010 and has fallen well under 10% just a decade later. Similarly, “empty nesters” often prefer downsizing to quieter neighborhoods. The key to a robust and resilient housing market is its ability to match housing preferences to as wide of a range of housing types as possible in real-time.
Florida’s housing market is under significant pressure, some of which were created or accelerated by the pandemic. Many households took advantage of remote work flexibility and technology to leave packed urban areas such as New York City for less dense but urban areas such as Florida’s Treasure Coast along the South Atlantic a few hours away from bustling Miami or the more bucolic waters of the Gulf Coast. The state has added 2 million people, more than 900,000 households, since 2015 with a recent bump of 162,161 moving in from 2021 to 2022 alone. Meanwhile, the housing supply in Florida has not kept pace. Too many people chasing too few homes means higher prices and longer commutes.
What prevents real-estate markets from meeting the growing demand for different types of housing is, ironically, the system created by mandated statewide growth management in 1985.10 All cities and counties created comprehensive zoning maps for particular land uses consistent with a statewide plan. This process greatly lengthened the resources, time and money spent securing the right permits to build in the 1990s and 2000s. Though many believe the 2011 Community Planning Act (CPA) ended growth management in Florida, a recent analysis of policy changes revealed the CPA did indeed substantially shift planning activities from the state to the local level.