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Price tag escalates on being Floridian

The cost of living in Florida used to be a lure. But wages haven't matched the reality of rapidly rising prices.

By JEFF HARRINGTON
Published June 19, 2005

"In Florida, it's not just that the weather's great; it's that the living is easy and cheap. . . . Florida continues to promote the fantasy. "The rules are different here.' "

- U.S. News & World Report. October 1993

The rules Florida once touted to lure vacationers and transplants alike - that inexpensive living made this state a dream without bounds - have changed.

Longtime Floridians are grappling with a harsh new reality. Namely, that small, single-digit increases in wages and government benefits haven't kept up in a land where the costs of housing, insurance, gas and medical benefits have zoomed skyward.

Take 1999 as a base year. Average home prices in the state are up 70 percent since then. Gas prices are up 78 percent. Homeowners insurance up 49 percent, not including the double-digit hikes hitting many policyholders this year.

Nationally, workers paid 72 percent more toward family health insurance policies last year than they did in 1999. Medical costs in Florida rose an average of 10.4 percent each year between 1980 and 2000, making it the fourth fastest-growing state in the country for those expenses, according to the Kaiser Family Foundation.

Through it all, the growth in workers' paychecks has been anemic.

Average wages statewide have grown a cumulative 16 percent since 1999, slowed mightily by the dot-com bust that closed businesses and hobbled the economy. The story is the same for Florida retirees. They began 2004 receiving average Social Security benefits of about $920 a month; that's just 15 percent more than it was in 1999.

The affordability gap "just gets worse and worse every single year," said Bruce Nissen, research director of Florida International University's center for labor research and studies.

As of last year, Florida's median wage was $25,670, 12 percent below the national average. By contrast, the median sales price for an existing home in Florida in April was $218,600, 6 percent above the national average.

Don Lee can attest to the financial disconnect.

Lee, a 59-year-old press operator, loves riding his mountain bike along the Withlacoochee River. He cherishes the acre of land that surrounds his 1,100-square foot home in Hernando County, about 12 miles north of Dade City.

His fear is that he'll soon have to stow the bike and settle for an even smaller house without the land, maybe even an apartment, closer to his job in Tampa.

Paying $50 per week in gas to make the two-hour, round-trip commute in his F-150 pickup is taking a toll. So is his latest homeowners' insurance bill of $1,650 from Citizens Property Insurance; that's up 36 percent from last year.

And because he briefly left and then rejoined his company at a lower salary, he's making less money than he was five years ago.

"I'm being squeezed," said Lee. "The last three or four years, it's like you're choking. . . . I've got a lot of friends with the same problem."

Indeed, the fear of being priced out of the market is very real throughout the region's working class.

Teachers and police officers in the bay area earned enough to afford a median home here two years ago. Now, their average salaries fall well below the comfortable margin for affording a median-priced home, according to a report expected to be released later this month by the Center for Housing Policy in Washington, D.C.

Barbara Miller, a teacher of severely emotionally disturbed children, recently bought a house in Riverview after finding she couldn't afford a home anywhere near the South Tampa neighborhood where she grew up.

"It's not that we make as horrible salaries as we used to," Miller said of teachers, "but it's not like we keep up with the private sector."

Last week, Florida Gov. Jeb Bush acknowledged the cost squeeze has become "a significant problem."

"We now are going to be challenged because of, particularly in the coastal areas, the lack of affordable housing," Bush said in an e-mail to the Times. But he added, "We're not the only state dealing with it."

True. But Florida has accumulated some striking distinctions. Just last week, the Tampa Bay area was deemed the least affordable metro area in the nation based on the cost of housing and getting around. The study by two nonprofit think tanks said bay area residents spend an average of 57.7 percent of household expenditures on housing and transportation.

No. 2 in the survey: Miami.

Across Florida, the divide between income and the cost of living is stark. A working-class family scouting for a house in Bradenton, for example, is quickly sobered by a single statistic: The average existing home there sold for $275,100 last quarter, up a stunning 45.6 percent in one year. It's the highest jump in the country. Nearby Sarasota was the second highest.

In addition, apartments are converting to condominiums at a rapid pace, particularly in the bay area, limiting options for fixed-income or transient workers.

Four hurricanes and a sinkhole crisis forced thousands of bay area residents into state-run Citizens Property, which provides coverage for those who can't find insurance on the open market, but which also, by law, must charge higher-than-market rates. As a result, many have seen their homeowners' insurance bills double in the past two years.

How are people coping?

On the low-income side, more families are joining forces to split the cost of buying or renting a single home. "It's not unusual to have three or four families living in a dwelling where before there was one or two," Nissen said. "It's just astounding."

The tale is similar for those on a fixed-income. Allan Schwartz of New Port Richey invited his mother-in-law to move in with him and his wife four years ago. Her health insurance costs have been soaring every year. "Her (health) insurance, alone, eats up her Social Security check," Schwartz said.

The rise in housing prices led Tim Wilmath of the Hillsborough County Property Appraiser's Office recently to crunch some numbers. He compared average wages in the Tampa Bay area to average home prices since 1980, and when he did he learned something startling:

Bay area residents are spending more of their annual income on housing than they have at any time in the past 25 years. And that doesn't include homeowners' insurance and taxes.

"It's not affordable housing if you have to spend more than 30 percent of your income on housing," said Nissen, the FIU researcher. "A large number of people are spending over 50 percent of their income on housing needs. That can't keep up. That just can't happen."

In the past five years, according to the Center for Housing Policy, the number of working families paying more than 50 percent of their income for housing has grown 76 percent, to 4.2-million.

Recent attention has focused on soaring home prices in coastal areas of Pinellas and Sarasota counties and South Florida. But that trend creates a widespread problem, insists Jaimie Ross, president of the nonprofit Florida Housing Coalition.

"It used to be it was the janitor at City Hall who needed affordable housing. Now it's the employees at City Hall that need affordable housing. It's the planners, the teachers and the nursing assistants," said Ross, who also is affordable housing director for 1000 Friends of Florida, an environmental group.

"It's hit the low-income, paid professional workforce whose income is not high enough to allow them to afford even a modest home in Florida."

Employers also are feeling the impact. Some complain that they can't pay enough to lure employees to the area; others say the bay area is no longer the place to put a low-cost operation.

Earlier this month, outsourcing firm CIBER Inc. heralded the opening of a new software development center in Tampa, where it eventually intends to hire more than 200 employees.

But CIBER's chief executive, Mac Slingerlend, said the bay area almost was knocked off the short list because of its high cost of living. In fact, "from a pass-fail standpoint, it failed," Slingerlend said. He chose to overlook the cost-of-living issue because he felt there was a wealth of tech talent here, from retirees to recent graduates.

Bernadette "Bernie" Craig, Pinellas County market president for Bank of America, is concerned the growing divide between wages and living expenses could make the Tampa Bay area the next Seattle, where teachers, retail workers and others have to commute in to work because they've been priced out of the local real estate market.

She worries that her tellers will be unable to find affordable homes close to the branches where they work.

"We could see that in the next three to five years," Craig said. "I'm very concerned in Pinellas County, especially. Where are people going to live?"

Agnes "Aggie" Voss is asking herself that very question.

Like Lee, the press operator who lives in Hernando County, Voss received notice from Citizens Property that her annual homeowners' premium was jumping. For her, the bill doubled from $1,081 to $2,157.

"I about had a heart attack," she said.

A 68-year-old widow who lives in Bayonet Point near Hudson, Voss quickly considered alternatives.

She couldn't sell her house and move where insurance rates might be lower because she would get hit by much higher real estate taxes. She searched for a condominium or villa, but couldn't find a decent one in her area for less than $200,000, far above her budget. Her Social Security check has risen just $1 more a month.

"The only thing that saved me this year is my daughter sent me money," she said. "If they double this again on me next year, I'm down."

From coast-to-coast, builders, activists and government leaders have tried different approaches to tackle housing affordability.

In Washington, D.C., one of the buzzwords is "exclusionary zoning," which requires developers to set aside a certain number of units for affordable housing.

In Chicago, some employers have been active in the assisted housing movement, agreeing to pay a portion of the mortgage down payment for employees.

In Sarasota County, which is suffering an acute case of home price runup, a community foundation earlier this month said it would pay $16-million for 145 acres east of Interstate 75 to build workforce housing. In May, the city of Sarasota issued a study that found more than 70 percent of its employees live outside city limits, some commuting as much as 100 miles a day.

Florida housing activists said they were disappointed that affordable housing wasn't a greater priority in the last legislative session. But some local governments are stepping up.

Lee County, for one, has devoted $1-million toward setting up a community land trust. The trust, in essence, separates ownership of the land from ownership of the house. Typically, nonprofits own the land and sell houses built on the tract at lower-than-market prices to homeowners, subject to a 99-year ground lease.

A homeowner can build up equity in the house and modest appreciation, but gains nothing from growth in area land prices.

Banks also are increasingly focused on the problem. Bank of America and AmSouth both announced affordable housing initiatives in recent weeks.

That's of little solace to homeowners such as Lee Shaw of New Port Richey, for whom price escalation has already reached a critical point.

Shaw, 50, said he and his wife, Idalla, have lived in Florida for 22 years. Both are on disability, spending $600 per month just on their medicines. Their Social Security payments, going up 1 or 2 percent a year, "don't amount to squat," he said.

"Prices are just ridiculous. The groceries. Gas," he said. "It's to the point where we can't even pay our bills."

The final straw came courtesy of a familiar source, Citizens Property Insurance. Two years ago, the Lees paid less than $500 for homeowners' insurance. Renewing with Citizens this year will cost them $1,902.

"We're going to lose our house because of this," Lee said last week as he pondered options, even out-of-state options. "But we've been looking around and the way house prices have gone up, there is no way we can afford to buy in this area any more."

Times staff writers Scott Barancik and Joni James and Times researcher John Martin contributed to this report. Jeff Harrington can be reached at harrington@sptimes.com or 813 226-3407.

[Last modified June 19, 2005, 00:38:17]