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FAA Releases Housing Cost Drivers and Affordability Study

Posted By: Amanda Gill
Municipal Policies, Racial and Economic Disparities Undermine Housing Affordability, Report Finds

ORLANDO, FLA., Sept. 15, 2020: Municipal policies and historical economic and racial disparities contribute to a lack of housing affordability in Florida cities, a report commissioned by the Florida Apartment Association (FAA) has found. The need for access to stable, affordable housing has become more apparent than ever during the COVID-19 crisis, and will remain a critical issue post-pandemic. The problem, however, is far from new, said FAA President Katie Wrenn, director of training and development for WRH Realty Services Inc.

“Housing affordability challenges are front and center in many Florida communities,” Wrenn said. “Sadly, decision-makers often don't know where to start to address this complex issue. FAA's leadership sought to study this issue in depth with the goal of shedding light on the specific factors that are driving the cost of rent across the state.”

While Florida has seen a surge of multifamily development in recent years, the number of newly constructed units has not come close to keeping pace with the state's rapidly growing population. This report confirms Florida's rental housing shortage and compounding factors at the local level fuel Florida's housing affordability challenges.

In an effort to examine the diversity of development challenges, FAA partnered with HR&A Advisors, a real estate and public policy consulting firm. The study, Drivers of Multifamily Costs and Affordability in Florida, focused on four metropolitan areas: Jacksonville, Miami, Orlando, and Tampa. The research included an assessment of housing demand, interviews with housing developers, and evaluations of various local policies to determine the amount of rent that would be required to make the development of a new apartment community viable in each of the metro regions. The study identified the four key factors driving the cost of apartment rents in Florida:

  • Rapid economic growth
  • Exclusionary zoning practices related to historical economic and racial disparities
  • Rising land and construction costs
  • Municipal policies

The report found municipal policies such as property tax increases, impact fees, project delays, and design review processes, when compounded together, can increase rents by 12 to 17 percent. This increase ultimately shifts affordability away from Florida’s middle-income households. In addition, the analysis revealed most residential land in Florida’s cities is zoned exclusively for single-family housing, which reinforces economic and racial disparities in Florida’s communities. As a result, regions with median rents below $1,000 often lack public infrastructure investment and cannot support the operation or construction of new multifamily housing in the very areas that need it the most.

“As policy leaders wrestle with how to best address Florida’s housing affordability challenges, we must consider the cost drivers at the local level,” said FAA President-Elect Kimberly Maggard, senior vice president of operations for Royal American Management Inc. “The development process varies significantly from one jurisdiction to the next and can be quite unpredictable. State and local elected leaders can play an important role in addressing these barriers to construction, which will ultimately improve housing affordability and opportunity for all Floridians.”

Although Florida’s housing affordability challenges are decades in the making, solutions are not out of reach. The report encourages local governments to evaluate the impact local policy decisions will have on the cost of housing and to partner with housing developers to ensure the state’s housing supply can support current and future economic growth. Potential solutions include: removing zoning barriers, streamlining the development approval process, committing local funding to preserve or incentivize the construction of affordable housing, and supporting housing opportunities in traditionally disinvested areas so communities can grow equitably.

The entire report, including an executive summary, can be viewed and downloaded from faahq.org/2020-housing-costs-study