Skyrocketing property insurance. Fast-rising home prices. Troublemaking local officials. Hotter summers. And labor shortages exacerbated by anti-immigrant legislation. These are among a rising pile of problems that lead some of Florida’s housing experts to fear their state’s historic advantages are eroding faster than the Sunshine State’s beaches.
Those concerns were on display Sept. 28 during a panel discussion at the Florida Building Material Alliance’s annual trade show and convention. Click here to view the 90-minute session hosted by Don Magruder, CEO of RoMac Building Supply. Here’s a summary of what was said.
“I hate to tell you, but California is where the future is coming from, and it’s coming here in terms of how we’re managing our process of growing up,” said Jennifer Warner, Director of Economic Development for Florida Realtors, the state’s trade association .”Florida has kind of missed out on a lot of the growth [issues] over the last 30-40 years because we’re still pretty new. We’re only hitting our adult years now, and there’s some pain we’re all feeling.”
What kinds of pain?
The monthly payment for a typical new house in Florida has rise in $2,100 from $1,300 in just three years.
Anecdotal evidence indicates property insurance premiums are coming in 40% to 60% above where they were last year. That makes Florida less affordable even for those who live here now, much less for those paying ever-higher prices to move in.
Driver’s license issuances to people who moved in from other states appear to be slowing. Meanwhile, there’s evidence some Floridians are moving to Georgia and the Carolinas, reversing strong in-migration during the COVID epidemic.
“Our reputation is starting to change with regard to ‘is FL still affordable?’” Warner said. “That was always our selling point, and it’s starting to shift.”
Labor Woes
Compounding that problem is a sharp increase in labor costs—assuming builders can even find workers.
Legislation enacted earlier this year to crack down on undocumented aliens reduced the number of available construction workers by at least 10%—more in South Florida—and emboldened the remaining ones to demand higher wages, said Debbie Rodriguez, Owner and CEO of Competitive Edge Partners, which has 400 employees who do work for builders. She said construction on her own recently completed home was delayed more than 6 months because the general contractors “had no control over their trades. They showed up when they wanted to show up.”
“There’s a war on all fronts [against] affordability.” Declared Thad Lynch, an Orlando homebuilder who also is president of the Greater Orlando Builders Association.
For Don Viscio, Chief Administrative Officer at Tibbetts Lumber, he has more challenges with fixed costs—particularly property, casualty, health, and worker’s comp insurance coverage—than with labor. That’s forcing Tibbetts, one of the biggest independent lumber dealers based in Florida, to raise its prices.
“Margin rates that were acceptable in the past will have you breaking even or losing today,” Viscio said. “So the paradigm of what margins were acceptable in the past, you can throw them out the window. You have to get a margin commensurate with what your fixed costs are. And that’s across all business.”
The Math Still Works
To be sure, Florida is nowhere near the dumpster. “We really enjoy the Florida market,” said Mike McCrobie, President of Builders FirstSource’s East Division, “It is tougher for us to find locations to support our builders’ needs. But from a starts perspective, it’s neck and neck with Texas. Affordability will continue to come up. We’re trying to stay ahead of it., We want to expand our business in Florida.”
Said Lynch: “It does feel like an attack on all fronts, but there’s always an equation and as long as there’s a demand and we can make the equation work, we’re going to build houses. Every year has extraordinary circumstances, and we’ve always found a way.”
Still, Lynch worries. “We look at various types of buyers and it’s getting harder to move up, particularly for those already here,” he said. “Is Florida still affordable? Obviously, we see it as a value proposition for people coming in, but is it for people already here? Can you make that next step from your starter house to the next house? … What people can buy is getting to be less and less.”
Local Logjams
Magruder asked Lynch: Are you concerned that the local jurisdictions—the people allowing developments—are turning Florida into California or New York?
“Every day,” the builder replied replied. “They talk about affordable housing yet they are passing laws that are making it harder to title land, harder to build on land. And they just don’t align. They’re allowing local governments add architectural requirements that just don’t add value. I see a lot of that and it is frustrating. We can absolutely F it up.”
Rodriguez is known in Florida for her efforts to increase training opportunities, particularly for women and for ex-convicts who need a second chance at a career once they leave prison. “The work force here is 80% Spanish, yet it’s been difficult to get people to realize they should be given a chance,” she said. And some contractors revolt when Rodriguez assigns a woman to a job site.
McCrobie’s territory goes from Maine to Miami, so he was better positioned to assess Florida’s status vs. other areas. When asked if it is easier today to do business in Georgia and the Carolinas than in Florida, he replied: “The easy answer is yes.”
But then he added: “I still think that when you look at the population coming here, it is still a pretty strong number. So as we look at it, we have to be mindful to work together to make Florida as attractive as it’s been in the past. And we’re going to need to look at a lot of areas to do that.”
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