The housing imbalance
A quarter-century of housing growth, with one crucial piece missing
By Barbara Peters Smith
Those imposing gatehouses fronting many Sarasota County subdivisions convey an unmistakable message: You may not enter unless you are known to the residents inside, and expected by them.
That is, unless you mow their lawns, clean their pools, vacuum their floors, deliver their packages, walk their pets or provide home health services.
As new residential construction explodes on Sarasota County’s remaining open land, from Lakewood Ranch in the north to West Villages in the south, some citizens applaud the bursts of economic activity while others decry the suburban sprawl. Some citizens do a little of both.
But few stop to think about where those landscapers, pool cleaners, housekeepers, delivery people, pet sitters and home health aides can afford to buy or rent their own homes.
Jon Thaxton, a longtime county commissioner and now senior vice president for community investment at the Gulf Coast Community Foundation, grew up in Sarasota County. He has watched us paint ourselves into this particular corner.
“When I was a child, landscaping was not an industry,” he says. “There was no pool cleaning industry. For two and a half decades, we did nothing but increase this demand for a service workforce and built virtually no housing to accommodate it.”
Starting with a career in real estate, Thaxton evolved in his public life from seeking to preserve scrub jay habitats to championing the deeply unpopular cause of workforce housing. Both issues are side effects of the reasonable desire to maximize profits from a limited supply of land in this highly desirable patch of Florida.
“About 25 years ago in Sarasota County, in all practical terms,” he notes, “we stopped building entry-level housing. Period. There is no more Kensington Park, no more Sarasota Springs, no more South Venice — nothing. We just stopped building a home that is affordable to a family just getting started.”
Peer at some of these older starter-home neighborhoods through the lens of the Zillow real estate website, and you’ll spot another layer to the problem: Not only is the stock of modest, 1,500-square-foot houses low, but clusters of blue dots indicate that more of them than you might expect are tied up in foreclosure, even eight years after the Great Recession.
While property values in most parts of Sarasota County are bubbling back upward toward their heady highs attained before the recession — to the joy and relief of many homeowners — flat wages for the 52 percent of all workers who hold service jobs relegate them to a category of residents known as “cost-burdened.” This simply means that more than 30 percent of what they earn is funneled into housing expenses.
“If a family spends over 30 percent of their income on housing, then the housing is not affordable,” says Thaxton, “because you put that family in the position of making choices that are not healthy for the family, such as a reduced quality of food or delayed health care.”
In Sarasota County, more than a third of all homeowners and more than half of all renters fit this description — above the national averages of 22 percent for owners and 49 percent for renters. Many cost-burdened homeowners are doubly disadvantaged, according to Harvard University’s Joint Center for Housing Studies: Not only have their incomes remained stagnant since the recession, but their home values have not rebounded as sharply as those in higher-income neighborhoods. These are the residents who are most likely to remain underwater in their mortgages, with no ability to refinance or sell — so, for them, the foreclosure crisis is still a cause for sleepless nights.
At the same time, an overall appreciation in home prices makes ownership an impossible dream for many families and young adults. Nationally, the share of families with children living in rental housing climbed from 32 percent in 2005 to 39 percent in 2016, accounting for 22 percent of the growth in rental demand. And most additions to the supply of rental housing have been at the high end of the market.
Even with existing income property in Sarasota County, more owners are choosing to reserve access for snowbirds and vacationers who pay higher seasonal rates. “Consequently, the share of homes available to full-time residents is decreasing,” notes the county’s May 2017 “situational report” on housing affordability — which the County Commission has identified as a priority.
Teri Hansen, CEO of the Charles & Margery Barancik Foundation, hopes governments will learn from the experience of the Great Recession, when land prices plummeted, and prepare to assume a larger role in the workforce housing solution.
“We didn’t get ahead of the housing issue early enough,” she says. “It would be nice to think our municipalities would keep some dry powder for the next downturn — and then be able to, when everything’s cheap, set aside some property to meet this recurring need.”
The situation report notes that new construction of condominiums and apartments, as opposed to single-family homes, has increased lately in Sarasota County. But we have an especially long way to go toward meeting demand. Allen Parsons — the county’s planning manager, soon to become planning director for Longboat Key — points out that 79 percent of our population lives in single-family houses. Nationally, the average is 74 percent.
And a startlingly high share of those homes contain square footage that nobody uses, and bedrooms where nobody sleeps.
“If you look at the percentages of one-person households in the county, that’s about a third,” Parsons says. “Two-person households, that’s another 44 percent. So three-quarters of our households are one- and two-person houses. There’s an indication of demand for smaller homes, but not much market response. So potentially you have a mismatch.”
Not in any backyards?
Why do builders here insist on competing with each other for the rich cream at the top of Sarasota County’s housing market — the 15 percent of new residents with annual incomes over $75,000 — instead of diversifying our housing options to meet obvious demand? The simple explanation, they say, is that time is money. Selling or renting to customers with ready means is easier and quicker, providing a predictable cash flow to repay loans and break ground on more high-yield properties.
Another reason is that for even the most well-intentioned developer, workforce housing’s slimmer profit margins leave so little room for error that a few buyers’ or renters’ inability to pay can create an insoluble math problem. Attempts to narrow this risk by winning government concessions on requirements like density, zoning, parking or impact fees can involve more time and patience than builders are willing to commit — as happened with the recent unraveling of a proposal for the 510-unit apartment complex in Venice known as John Nolen Gardens.
And then there is the classic problem of resistance from nearby residents.
“I don’t think Sarasota is in any way unique there,” Parsons says. “This is a problem across the country — a built-in constituency for maintaining the status quo.”
The antipathy toward workforce housing projects surfaced recently as an issue in Venice’s City Council race. At a candidates’ forum covered by Herald-Tribune reporter Earle Kimel, incumbent Deborah Anderson said she had been a victim of a crime she attributed to a renter who lived nearby.
“I am sympathetic to people who perceive that bringing affordable or lower-income housing into their neighborhoods is going to increase the likelihood or the possibility of crime,” Anderson said.
She is not alone in this belief, and some research has found a correlation between rental properties and crime. But the cause-and-effect process is more nuanced than most people think, says Dustin C. Read, an assistant professor of real estate and property management at Virginia Tech who studies the relationship between public policy and real estate markets.
“I can pretty comfortably say that the concerns of surrounding homeowners about rental housing being detrimental haven’t been borne out in the research to the extent that they would expect,” Read says. “People are more worried about it than the problems actually turn out to warrant.”
For one thing, renting is no longer seen as a last resort for residents who can’t afford to buy a home.
“There’s been a fundamental shift in the marketplace,” Read says. “A lot of young professionals have decided to defer home ownership because they don’t know where they’re going to land, and more empty nesters are downsizing and renting. So it’s not necessarily true that rental housing is going to cater to a low-income demographic.”
One lingering effect of the recession is an understandable sensitivity among homeowners about impacts on property values that they cannot control. Since investment companies purchased so many Sarasota County homes that were under foreclosure, Read says, deferred maintenance by absentee owners could be contributing to neighbors’ safety concerns.
“Signs of dilapidation are correlated with signs of criminal activity; they’re a signal to potential criminals,” he notes. “But it doesn’t have much to do with the fact that there’s a renter in that unit. You’d have a hard time finding a consistent number of studies saying that people who rent are more likely to engage in criminal activity.”
Low-income neighborhoods do experience higher levels of crime, Read says. But again, that connection doesn’t automatically apply to a workforce housing development.
“In some instances apartments reduce crime because they remove blighting elements in a neighborhood; you can have more vibrancy, and people on the street,” he says. “And apartments tend to cater to smaller household size; that can be a deterrent to crime.”
Stuck in traffic
If you happen to live in or visit one of Sarasota’s neighborhoods where cost-burdened renters tend to cluster — places that stand out sharply when you look at a heat map of the county — you’ll notice a few visible signs of instability around the end of every month. These are piles of cast-off household goods mounded at the curb: old TV sets, broken strollers, furniture and toys. Another family whose rent has been raised, or whose other expenses made paying the rent impossible, is once again in transit.
“We have about 18,000 households that are spending in excess of 50 percent on housing,” Thaxton says. “These people are $400 from losing the house that they’re in. Now they have an additional stress and additional expenses they don’t have money for, which causes them to go to payday loan type outfits, and the debt cycle goes on. It’s the only way of life that they see.”
With so many empty bedrooms in the county, and an aging population in need of caregivers, there has been some discussion of establishing home sharing programs — where elders open their homes to younger housemates in exchange for assistance. The New York Foundation for Senior Citizens has such a service that matches hosts 60 or older with suitable guests, and is widely considered a success.
“It really seems like there’s an untapped potential in home sharing,” says Parsons, the county planner. He notes that the county allows as many as six unrelated adults to live together in one home. “But you’d have to have an entity to vet people as potential roommates.”
In the meantime, income-challenged Sarasotans are merging families on their own, according to data collected for the United Way Suncoast’s 2017 report on the county’s ALICE population — short for asset-limited, income-constrained and employed. The ALICE Report puts the “household survival budget” in Sarasota County at $20,184 for a single adult and $56,520 for a two-adult family with two young children.
“This survival budget is extremely conservative,” says Holly Bullard, United Way Suncoast’s regional director for financial stability initiatives. “Yet it’s still one in three families that aren’t making it. We know that in actuality, it’s more than that. What we’re seeing is this doubling up and tripling up of households. A lot of that is due to the barrier of housing costs.”
The other survival strategy for income-limited workers is, of course, the traditional one: Move to cheaper housing that is farther away from the workplace. First Manatee County and then North Port have served as bedroom communities that helped Sarasota employers keep their wages below the cost of living here. But the median sales price for a single-family home in Manatee County has nearly doubled since the year 2000, to $266,500 — higher than Sarasota County’s $244,900.
North Port, in south Sarasota County — where the Great Recession imposed only the slightest of pauses in explosive growth — still offers more affordable rents than communities closer to employment centers. But newer development there, notably in the West Villages expansion, is at higher price points. And while the price of gasoline is modest for now, long commutes between home and work exact hidden tolls on cost-burdened households.
“A lot of these families don’t even have two persons making $10 an hour, working 40 hours a week,” says Thaxton, of the Gulf Coast Community Foundation. “Instead of studying or reading to their kids, or being home for dinner, they’re stuck in traffic on the interstate.”
The United Way’s Bullard observes that many people don’t realize Florida ranks No. 1 in the nation for housing costs, relative to the state’s lower wages. The pressure on income-constrained workers to keep driving until they find a home in their price range, she says, has long-term implications for the character of a community.
“If you can’t afford to live within 60 miles of work,” she asks, “is that the future we want to go for?”