Is Florida Facing an Apartment Shortage?
In a recent report from the Florida Apartment Association, there is going to be a shortage of apartments if we don’t increase the production. Of course, this won’t be until 2030, but it’s something to look at. Parker Associates has been working on a number of Apartment studies in recent years and we’ve had similar findings every time…there’s a need.
In a recent article resulting from this study, the findings were similar. As more and more Floridians turn away from homeownership in favor of renting, the state is facing a serious shortage of apartments.
Numbers from the Florida Apartment Association show that the state would need to add over 600,000 new apartments by 2030 to keep up with both the rising population and the increased demand. According to the numbers, there are over 900 people moving to the state of Florida every day as per the association’s government affairs director. The thinking on this is that if we don’t have housing for them, at some point, those individuals and their companies and their economic opportunity will go to another state. Obviously, those of us in Florida don’t want to see that.
The report estimates that 47,814 new apartment homes would have to be built per year to address the state’s needs in the next 10 years. Florida is projected to add only 33,688 apartments in 2019. It’s likely that this apartment shortage is driving up current rents.
The Association Director suggested that if Florida is not keeping up on pace with building the amount of housing needed, the housing affordability crisis in Florida is only going to get more acute. This affordability issue is already visible in many urban centers across the state.
Despite the increased demand for affordable apartments, Florida developers haven’t been keeping up. Rising material costs and regulatory fees have made it more expensive to build across the state. The estimate is that about 32% of a developer’s construction costs come from a combination of federal, state and local regulations like fire codes and inspection requirements.
There is lots of supporting research exposing this gap in the market between affordability and the reality of pricing and availability. Outside of local governments coming to the table and offering some sort of incentive to help offset the front end costs that are associated with development, affordable construction just isn’t happening right now.
The Florida Apartment Association recommends that developers and government officials work together to reduce upfront construction costs and pass on savings to the consumer. There is a suggestion that local governments reduce impact fees, offer property tax discounts, and allow developers to increase the density of their properties in order to incentivize developers who rely on investors to fund their projects.
When there is a situation where you’re trying to build affordable housing and rents are capped at a below market rate, you can see a situation where they cannot get the return on investment that’s needed to get those investors to the table, there’s a big problem. It’s about housing being priced at a level that folks can afford to have a good quality of life and also have quality housing.
Parker Associates has worked extensively through the years on Multifamily housing demand and affordability. It’s always been an issue and likely always will be.
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J. Chris Parker is a principal of Parker Associates of Jacksonville, Florida, marketing consultants to the real estate industry as well as the lead associate on the new Barclay’s branch, Barclay’s Real Estate. Though based out of Jacksonville, Florida, Chris & David and the team at Parker Associates have worked in 17 Countries and 33 States through the years as well as 65 out of 67 counties in Florida. Chris can be reached at 904-607-8761 or via email jcrhis@ptccomputersolutions.com.