Housing Affordability Housing Affordability OverviewOverview

Alachua County, FloridaAlachua County, Florida

Shimberg Center for Affordable Housing

M.E. Rinker, Sr. School of Building Construction

College of Design, Construction and Planning

University of Florida

In today’s presentation, In today’s presentation, we will:we will:

Look at a brief overview of Alachua County households

Define affordable housingDefine housing “cost burden” Look at examples that illustrate who may

experience housing cost burden in Alachua County

Let’s get started by looking at Let’s get started by looking at households in households in

Alachua County. . .Alachua County. . .

Alachua County HouseholdsAlachua County Households

Total households (2000): 87,509About 55% of households are familiesAbout 25% of households are families with

childrenAbout 6% of households have one or more

members age 65 or above

Alachua County PovertyAlachua County Poverty

Nearly 23 percent of Alachua County’s total population was below the poverty level in 1999

This compares with 12.5% of Florida’s total population in poverty for the same year; and

12.4% for the U.S. in 1999

Alachua CountyAlachua CountyRenters or Owners?Renters or Owners?

Owner-occupied housing accounted for about 55% of the housing units in Alachua County in 2000

Renter-occupied housing made up about 45% of Alachua County’s housing units in 2000

Florida’s homeownership rate is about 70%U.S. homeownership rate is about 66%

Now that we’ve seen a brief Now that we’ve seen a brief overview of Alachua County’s overview of Alachua County’s households, let’s move into a households, let’s move into a

discussion of affordablediscussion of affordablehousing. . .housing. . .

.

What is Affordable Housing?What is Affordable Housing?

Housing is considered Housing is considered affordable if a household pays affordable if a household pays no more than 30 percent of its no more than 30 percent of its gross income for all housing gross income for all housing

related costs.related costs.

Rental housing is affordable if Rental housing is affordable if these items total no more than these items total no more than

30% of gross income:30% of gross income:RentElectricGasWater & Sewer

Homeownership is affordable Homeownership is affordable if these items total no more if these items total no more than 30% of gross income:than 30% of gross income:

Mortgage payment, including:– Principal– Interest– Taxes– Insurance

Homeowners’ association fees (if any) Allowance for periodic maintenance Electric Gas Water & Sewer

What is housing“cost burden?”What is housing“cost burden?”

Households are considered cost burdened if housing related costs exceed 30 percent of gross income.

Households who pay more than 30 percent of their gross income for housing may have difficulty affording other necessities such as food, child care, transportation and health care.

Alachua County Cost BurdenAlachua County Cost Burden

Nearly 37% of Alachua County renters are housing cost burdened.– Note that this number has been adjusted to

exclude student households.

More than 25% of Alachua County homeowners who have a mortgage are cost burdened.

Since housing affordability is Since housing affordability is based on household income, based on household income, let’s look at some example let’s look at some example

groups’ earnings. . .groups’ earnings. . .

Earnings ExamplesEarnings Examples

Public school teachers (K-12) with a bachelor’s degree and 5 years’ experience: $28,800.

Deputy Sheriffs (entry level): $29,355 Firefighters (entry level): $26,735 Registered nurses (degreed, entry level): $38,522 Child Care Workers: $12,792

More Earnings ExamplesMore Earnings Examples

Secretaries: $17,748 Maids and housekeepers: $14,352 Food Service Workers: $12,771 Retail Sales Clerks: $13,104 Minimum Wage Workers: $10,712

Now let’s look at rental Now let’s look at rental housing in Alachua housing in Alachua

County . . .County . . .

Average Rental UnitAverage Rental Unit

Total housing costs for a 2-bedroom rental unit in Alachua County:– Average rent: $812– Electric: 94– Total housing cost: $906

What income level would make this rental unit affordable?– Income would need to be $3,020 per month or $36,240

per year

Using our example groups, Using our example groups, who can afford this rental who can afford this rental

unit?unit?Registered nurses can afford the average 2-

bedroom rental unit in Alachua County.None of the other workers in our example

groups can afford this rental unit.

How much of their income would How much of their income would other groups have to spend for other groups have to spend for

that average 2BR unit in Alachua that average 2BR unit in Alachua County?County?

Average 2 BR Example:Average 2 BR Example:

Experienced public school teacher earning $28,800 would be spending 38% of their gross income for this rental unit.

Deputy sheriff earning $29,355 would be spending 37% of their gross income for this unit.

Firefighter earning $26,735 would be spending 41% of their gross income for this unit.

Average 2 BR ExampleAverage 2 BR Example(Continued)(Continued)

Secretary earning $17,748 would be spending 61% of their gross income for this unit.

Child care worker earning $12,792 would be spending 85% of their gross income for this unit.

A minimum wage worker would need to work 135.32 hours per week to afford this unit.

If most of our example groups If most of our example groups cannot afford the average cannot afford the average

2BR rental unit, what 2BR rental unit, what cancan they they afford?afford?

How much can our example How much can our example households afford?households afford?

A public school teacher with 5 years’ experience can afford a unit renting for $626.

A deputy sheriff can afford a unit renting for $640.

A firefighter can afford a unit renting for $574.

How much can our example How much can our example households afford? (continued)households afford? (continued)

An experienced secretary can afford a unit renting for $350.

A child care worker can afford a unit renting for $226.

A minimum wage worker can afford $174.

Let’s shift gears to Let’s shift gears to homeownership. . .homeownership. . .

Homeownership AffordabilityHomeownership Affordability

The Shimberg Center for Affordable Housing publishes homeownership affordability information annually in The State of Florida’s Housing.

One of the ways of looking at affordability involves the calculation of an index.

Affordability IndexAffordability Index

An index of 100 means that the average house is affordable to the average household.

The higher the index, the more affordable homeownership is.

Alachua CountyAlachua CountyAffordability IndexAffordability Index

Alachua County’s index for the most recent year available (2001) was 121.38.

So on average, homeownership is affordable in Alachua County.

But how do we stack up But how do we stack up against other Florida against other Florida

counties?counties?In 2001, Alachua County ranked in the

bottom third of Florida’s 67 counties in terms of single-family homeownership affordability (actual rank: 47 of 67).

About 70% of Florida’s counties offer a more affordable balance between median income and median house price than Alachua County.

Let’s translate this into more Let’s translate this into more specific information. . .specific information. . .

Median Sales PriceMedian Sales Price

The median sales price for houses in Alachua County was $154,500 in the quarter ended September 30, 2003.

The median sales price for the same period in 2001 was $123,500.

This represents a 25.1% increase for the 2-year period.

How much income does a How much income does a household need to qualify for household need to qualify for

the median-priced house?the median-priced house?A household would need an income of

about $50,850 per year to afford the median priced house in Alachua County.

Note these important assumptions:– The household has no debt– The household is using FHA loan at 6.25%

fixed interest rate over 30 years

Which of our example groups Which of our example groups are income-qualified for this are income-qualified for this

house?house?

None of our example groups qualify.

Let’s look at an example Let’s look at an example selling at less than median selling at less than median

sales price in 2004. . .sales price in 2004. . .

Example PropertyExample PropertySpringtree II subdivision3 BR/2 BA1,623 square feetCarportBuilt 1979Sold January 29, 2004 for $124,400Sold for $80,000 on May 28, 1999

– represents nearly 56% appreciation in less than 5 years

How much income would be How much income would be necessary to qualify for a necessary to qualify for a mortgage for this home?mortgage for this home?

Household income would need to be about $40,950 to income qualify for this home, assuming:– No debt– FHA mortgage at a fixed 6.25% for 30 years

Now let’s look at our example Now let’s look at our example groups and see who can groups and see who can

afford this home. . .afford this home. . .

Who qualifies?Who qualifies?

None of our example groups qualify.

Now let’s look at income Now let’s look at income qualification in another way. . .qualification in another way. . .

How much house could our How much house could our groups qualify for?groups qualify for?

Public school teacher with 5 years’ experience qualifies to purchase an $87,512 home.

Deputy sheriff qualifies to purchase an $89,198 home.

Firefighter qualifies to purchase an $81,237 home. Registered nurse qualifies to purchase a $117,053

home. Secretary qualifies to purchase a $53,929 home. A child care worker qualifies to purchase a

$38,870 home.

Let’s wrap it up. . .Let’s wrap it up. . .

Who may be affected by Who may be affected by problems with housing problems with housing

affordability?affordability? Many of those who provide services essential to

community functioning, such as those employed providing public safety, nursing care, public education and child care.

Those who provide other essential services within our community, such as secretaries, retail clerks, food service workers and maids and housekeepers.

Useful links:Useful links:

Shimberg Center for Affordable Housing– www.shimberg.ufl.edu

Alachua County Property Appraiser– www.acpafl.org

Alachua County Dept. of Growth Management’s Housing Programs– http://growth-management.alachua.fl.us/

housing/housing_index.php

More useful links:More useful links:

Florida Housing Finance Corporation– www.floridahousing.org

Florida Housing Coalition– www.flhousing.org

Florida Supportive Housing Coalition– www.flshc.org

Further useful links:Further useful links:Florida Department of Education (follow

links to “Housing Assistance” for “Homes 4 Teachers” Program):– teachinflorida.com

U.S. Department of Housing and Urban Development (HUD):– www.hud.gov

Useful Calculators andUseful Calculators andHomeownershipHomeownership

Educational Information:Educational Information:GinnieMae

– www.ginniemae.gov

This site provides:– mortgage affordability calculator– buy versus rent calculator– other homeownership education information