When it comes to housing, Florida acts like it's made of Teflon. "It seems to be one of the last markets affected when things go bad and one of the first markets to come out of it," says Florida builder Robert Trautman, president of Homes by Kennedy in Deerfield Beach, Fla.
That it does. According to numbers recently released by the Census Bureau, Florida added the second-largest number of housing units (147,377) in the country between 2001 and 2002. Big builders, recognizing an opportunity when they see one, have been moving into Jacksonville, Tampa, and Orlando. But they probably could go just about anywhere in the state and find success. "I don't know of any place that isn't doing well," says Paul Thompson, executive vice president of the Florida HBA in Tallahassee.
The reason? Migration, migration, migration. Between 2000 and 2002, more than 122,000 foreigners and 163,000 Americans per year moved to Florida. Overall, demographers expect the state's population to increase by 2.5 million people per decade for the next 30 years, a drop from the recent past, when Florida gained 3 million per decade.
For those itching to move, the state does hold undeniable appeal. Florida has no state income tax, 770 miles of coastline, a reasonable cost of living, and a growing economy, with a lower unemployment rate (5.3 percent) than the nation (6.2 percent). "If you're looking at broad indicators, and you're looking for a job, Florida looks good," says Tim Chapin, assistant professor of urban and regional planning at Florida State University. "The secret is, the jobs are not very well-paying."
Of course, that's not a big deal for those over 65 years of age, who contribute the single largest number of new residents to Florida and represent about 15 percent of the state's domestic in-migration. But other issues--many of them influenced by the state's tremendous growth--matter to Floridians of all ages.
Traffic congestion has become a problem. In Orlando, drivers spent 25 more hours stuck in traffic in 2000 than they did in 1994, according to the Texas Transportation Institute's 2002 Urban Mobility study. Affordable housing has also become a challenge in some cities, as service workers attempt to find reasonably priced shelter. "I think one of the big soft spots in housing is affordable rentals," says Robert Stroh, director of the Shimberg Center for Affordable Housing at the University of Florida.
The tax base is another one. While Florida isn't confronting a deficit this year like many other states, it is facing painful budget cuts, especially in public education. With no income tax and extensive exemptions from state sales tax for businesses, Florida is feeling the tension of serving a growing population on a narrow tax base.
So residents and government officials are pursuing new approaches. Gov. Jeb Bush has been exploring a fiscal impact model for evaluating the costs and benefits of a proposed development. One potential November ballot initiative seeks to amend Florida's constitution to allow citizens to vote on changes to a local area's comprehensive plan. "It's a real threat to the development community," Thompson says. "It's a little scary that a homeowners' association mentality could take over the entire state."
The home building industry, which contributes $40 billion to Florida's economy, has felt those pressures, even while it thrives on strong demand. Approvals, while still lightning-fast by California standards, are taking longer, perhaps by six months or more in some counties. Localities want more from builders, who typically pay $10,000 to $20,000 in impact fees per house. So do land sellers. "Land prices have been going up 30 percent to 40 percent," says Trautman, who expects to close 550 homes this year in Palm Beach and the Treasure Coast.
Such a mix of development, politics, and demographics makes people wonder what Florida's future might look like. "That's the big question," says Smith. "Will Florida become relatively unattractive compared to [home] states and other potential destinations? We see no sign of it yet. Florida's still warm compared to Ohio and New York, and it's leading the nation in producing new jobs."
Taking stock: Here's what Florida's single-family housing stock looks like, according to "The State of Florida's Housing," an annual report by University of Florida researchers.
Total single-family units: 3,889,178
Average square footage: 1,914
Average age of home: 26 years
Owner occupied: 77.5%
Median sales price in 2001: $130,000
Learn more about markets featured in this article: Orlando, FL.