Affordable Housing in Palm Beach County Continues to be Out of Reach for Many

By Robert S Weinroth

One of the few things I remember from my college economics classes, over 40 years ago, is the law of supply and demand, considered one of the fundamental principles governing an economy. It is described as the state where as supply increases the price will tend to drop or vice versa, and as demand increases the price will tend to increase or vice versa.

During the real estate “meltdown,” less than a decade in our past, we experienced the result of a precipitous drop in demand. As homeowners found themselves “underwater,” seeking a willing buyer to purchase their residences became a near impossibility. Prices fell as there were no buyers, no ability to finance and where there were buyers, they were looking to grab assets at bargain basement prices.

Today, with the opposite dynamic in play, there is a dearth of affordable (workforce) housing. The Urban Land Institute defines workforce housing as being priced to serve households making between 60 and 120 percent of area median income.

Nearly one in four Palm Beach County households reported income of less than $25,000 in 2013 with a like amount earning incomes greater than $100,000. Just under a third of the households earned incomes of $50,000 to $99,999. The county’s median income was a hair under the national median ($51,804, compared with a national median of $52,250).

According the Zillow, the median home value in Palm Beach County is $266,700 with home values having increased by an average 6.3 percent over the past year. Zillow goes on to predict prices will rise 5.7 percent within the next year. The median price of homes listed in Palm Beach County is $349,500. The median rent is $1,950.

It is clear that using the ULI guidelines, a median priced home in Palm Beach County is out of reach for a large portion of our residents.

For homeowners, the good news (values rising 5-6 percent a year) may become bad news if the prospective buyers are priced out of the market. The only way to combat this is to encourage developers to construct residential housing stock that is affordable for our teachers, police, healthcare workers and middle managers.

Palm Beach County needs over 150,000 units of affordable housing to restore the necessary equilibrium to the market and allow residents to live, work, learn and play close to where they are employed. Another impact of requiring people to commute greater distances to work (due to the lack of housing affordability) is the daily congestion on I95 and our arterial road network.

What is Palm Beach County doing to address this? The county has in place a Workforce Program, was designed to provide for the development of workforce housing (either rental or for-sale units), in new residential developments within unincorporated Palm Beach County.

The program, which is intended to serve the housing needs of people employed in the jobs that the general population of the community relies upon to make the community economically viable, however, has only added around 500 “affordable” units to the county’s housing inventory.

Workforce housing is available to income-qualified households with incomes between 60 and 140 percent of the county’s median income. The county’s 2018 median income is $74,300 for a family of four.

One of the impediments to owning a home within the program is the unit cannot be sold or rented at a higher price during the restriction period. The program provides housing between $156,000 for low income (household range between $44,580 and $59,440) and $289,770 for middle income (household range $89,160 and $104,020).

For-Sale units include a deed restriction that requires the unit price to remain affordable for 15 years. If the property is sold before the expiration of the 15-year restriction, the subsequent purchaser must sign a new deed restriction for a new 15-year term.

It is clear this program is not meeting the needs of our residents. A full review of the program and its restrictions as well as how to incentivize developers to construct additional units needs to be addressed. Absent an holistic overview and new approach to increasing workforce housing our county will no longer be viewed as an affordable venue to grow and relocate businesses while housing continues to become more an more unaffordable.