Gulf Coast metros cited for lack of attainable housing

A new Urban Land Institute study concludes that the Naples, Sarasota and Fort Myers metropolitan areas are among the “least affordable” in the nation for housing, a phenomenon the group believes has severe cultural and environmental repercussions for the future.

The conclusions, based on 30 separate metrics measuring affordability, housing production and jobs in 112 metro areas throughout the U.S., paint a bleak picture of housing prospects for low- to moderate-income individuals and families.

The Naples-Immokalee-Marco Island metro area is ranked as the seventh least affordable region in the country, while North Port-Sarasota-Bradenton came in at No. 14. Cape Coral-Fort Myers was ranked 19th.

Throughout Florida, only the Miami-Fort Lauderdale-West Palm Beach metro area was ranked higher in regards to the lack of affordability, at No. 6.

Naples was also cited because 23% of its households earning between $25,000 and $74,000 annually are considered “severely cost-burdened” in terms of housing.

By comparison, 13% of the households in Sarasota area the same income spectrum are equally cost-burdened when it comes to housing, as are 11.3% of all households in Fort Myers. “Severely cost-burdened” means that households struggle to pay mortgages or rent or have to devote a substantial part of their incomes to pay for housing.

The ULI Home Attainability Index also found that only 14.5% of all homes in the Naples area are affordable to a four-person family earning at least 80% of the area’s median income. In Sarasota, the percentage was 28.7%, and in Fort Myers the figure rose to 31.9%.

Naples, Fort Myers, Lakeland and Punta Gorda also were labeled for having “weaker transit access” for residents.

Punta Gorda, one of Charlotte County’s largest cities, was also listed because 100% of its households — the highest percentage among the 112 metro areas studied — are located in “High-COVID-Risk Neighborhoods, according to the report.

“Fort Myers and the surrounding metro area have historically been viewed as a more affordable option in Southwest Florida, but it’s not that way anymore,” says Kristine Smale, a senior vice president at home researcher and data tracker Zonda and chair of ULI’s Community Housing and Development Product Council in Florida.

Smale adds by way of example that new home prices in the Fort Myers’ metro area have jumped 23% in the past year, while the year-over-year increase in the prices of existing home inventory have climbed by 20%.

Prices have climbed in large part because of in-migration from retirees and high-net-worth individuals and families who typically pay cash for homes and whose ability to buy larger and more expensive properties is greater.

“Southwest Florida has experienced unprecedented demand over the last year as a result of the pandemic, and that’s hindered a lot of progress in developing more attainable housing,” Smale adds.

“We’re facing some challenging times ahead in terms of attainability, which is unfortunate for local renters, first-time homebuyers and workers in typically lower-wage jobs like leisure, hospitality and healthcare.”

She says that until the state, counties and municipalities incentivize developers to build more attainable housing, rising land costs and in-migration will exacerbate the existing problem.

“Until people start leaving the state en masse because they can’t afford to live here not much will be done, and instead we’ll have more what we call ‘drive to qualify’ — lower-priced housing in places like Hernando, Polk and Pasco counties for workers in Tampa and St. Petersburg.”

Smale also contends that in contrast with 2007-2008, when a housing boom was fueled by speculation and ease of debt availability, today’s housing market is a solid reflection of stricter lending practices and real appreciation.

But the trend has serious consequences for residential and commercial real estate.

“It becomes a waterfall effect,” Smale says of rapidly increasing home prices. “It means longer commutes and more environmental degradation, lower quality of lives and other negative impacts. Something has to be done.”

But while the trio of Southwest Florida submarkets stood out, the lack of home affordability remains a nationwide issue, ULI states.

“There is a nationwide lack of attainable homes for many members of the workforce that is not limited to the most vibrant U.S. metropolitan economies,” the report states.

“Many households will struggle to simply maintain housing and pay off accrued rent or mortgage debts and will find tenure choice out of reach if prices rise and lending standards tighten.”