Florida’s Affordable Housing Crisis: The Troubled Path part 1 of 4

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TAMPA, Fla. – Brad Butler works long hours as a carpenter and home remodeler. He and his work partner spent three weeks and $6,000 of their own money updating a house in Dade City. But instead of getting paid for their work, they accepted a deal to rent the house at a discounted price of $1,400 per month for a year—because they could not find other options they could afford. After a year when the rent increases, they’ll look for other options.

“I’m a very honest hard-working person, but it just doesn’t seem that the economy has it in it to make hard-working people successful right now,” said Butler.  “Prices have skyrocketed three times, I think. And just in this area.”

People who recently moved to the Tampa Bay area may not believe what houses used to cost. For example, in 1998, a three-bedroom waterfront home in St. Peterburg sold for $133,000. That was near the start of the tech boom, which helped ignite the housing crisis.

Two years later, the tech boom crashed. Investors moved what was left of their fortunes into real estate, snatching up houses everywhere—but especially Central Florida. Real estate in our area had flown under the radar until the age of the internet revealed comparatively cheap homes (on or near the water) for the whole world to see.

At the same time, banks lowered their standards—approving high-risk adjustable mortgages to high-risk buyers with lower credit scores— while investors flipped one home after another. Many starter homes got demolished and replaced by larger, more expensive homes—further reducing the supply of homes working class families could afford.

Then, by 2008, those high-risk buyers stopped paying the soaring costs of the high-risk mortgages. Banks failed, the economy tanked and real estate dipped—but in the Tampa Bay area, houses still cost much more than they did ten years before. For example, the same house that sold for $133,000 in 1998, sold for $275k in 2009 at the end of the downturn.

The Great Recession and glut of foreclosures crushed home builders, reducing the supply of new homes as the economy recovered.

“We did have a, a shortage of building for a while, especially in Florida after the market crash. You know, we were ground zero for the market crash. It took a long time for builders to get back online. A lot of builders went bust as well when that happened,” said St. Petersburg City Councilman Richie Floyd.

Builders who kept going started building larger, more expensive homes for larger profits—increasing the shortage of starter homes.

As millennials moved out on their own, they preferred urban living, which drove a movement from the suburbs to the spiraling costs of living in cities like Tampa, St. Pete, Clearwater, and Sarasota.

Meanwhile, the government offered new tax credits for home buyers, and interest rates dropped. Warren Buffett advised his fellow mega investors to snatch up homes—saying he’d buy a couple hundred thousand himself if he could. They followed his lead by purchasing more houses, condos, and apartments across the nation—and Florida in particular. Large investors and corporations replaced small landlords and homeowners, and they charged soaring rents (especially in urban areas).

Then President Trump signed new tax cuts on investment profits- fueling the real estate frenzy.

Then the pandemic hit. Florida stood out for lifting lockdowns and restrictions before other states. That drove a flood of relatively wealthy newcomers eager to buy.

“Post pandemic and during the pandemic, we saw this shift from high tax states to states like Florida, where people can work here and get the benefits of living here and that has only accelerated that challenge,” said Florida Policy Project and former Florida State Senator Jeff Brandes.

A wave of hurricanes, a property insurance crisis, and a trend of millennials migrating south combined to burn working-class people who can’t find an affordable place to live- unless they really scrimp and live a long way from work.

We don’t yet know the long-term impact of the Hurricanes Debby, Helene, and Milton. But studies like this one in Science Direct show hurricanes tend to drive Florida home prices up in the short term.

“750 people are moving to Florida every single day. And there just isn’t enough housing being built to support that,” said Brandes. “And that’s kind of created the supply and demand challenge.”

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