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Rising home prices squeeze middle class

The Pinellas County real estate boom has made it almost impossible for many people to live here. The County Commission is seeking ideas to remedy the situation.

Published October 2, 2005

[Times photo: Scott Keeler]
St. Petersburg High School social studies teacher Scott Mohn, 31, helps ninth-grader Jonathan Carlier, 14, of St. Petersburg. Mohn has been looking for a home or condo in St. Petersburg within his price range of $70,000 to $90,000 for more than one year with no luck.

Scott Mohn doesn't want to give up his job as a social studies teacher at St. Petersburg High School for something that pays more, just so he can buy a home.

But after a year of looking, he said, it's clear he can't afford a decent starter home or condo in St. Petersburg.

"There are a lot of teachers in my boat," said Mohn, 31, who made about $35,000 last year. "It's a source of constant frustration."

Mohn's predicament highlights the scarcity of affordable housing in Pinellas County, where open land has nearly vanished and new development is rare.

Mobile home residents are being uprooted to make way for pricier housing. Maids and cooks can't afford to rent near the beach resorts that employ them. Teachers, nurses and police officers are finding that despite middle-class jobs, home costs have soared beyond reach.

Should the situation continue unchecked, homes in Pinellas could soon be affordable only to those at the upper reaches of the income scale.

Already, businesses are finding it tougher to attract top talent because of home costs, said Mike Meidel, the county's economic development director. Soon, he fears, companies won't consider moving to Pinellas because their employees will be unable to find housing at a reasonable price.

"We know it's coming," Meidel said. "If trends continue, it's only a matter of time."

County leaders realize that subsidized housing may become a necessity not just for the poor who need help making rent, but even middle-class wage earners who don't qualify for traditional housing breaks.

A group that includes county and city officials as well as area real estate agents and developers is scheduled to present potential remedies to the County Commission on Oct.18.

"We can no longer stick our heads in the sand," said board member Ronnie Duncan. "If we are going to do something, we need to do it now."

* * *

In August 2001, the median price of a single family home in Pinellas was $151,100. In August 2005, the most recent month for which figures are available, that number had jumped to $256,600, a 70 percent increase.

Personal wage growth has been negligible by comparison, climbing just 12 percent, from $31,741 in 2001 to an estimated $35,482 this year. That bump has been offset by increased costs for insurance, health care and transportation.

To purchase a home in Pinellas at today's median price and still fall within state and federal affordability guidelines, a wage earner would have to make about $80,000 a year, or more than twice the county's average income.

The ballooning prices result from demand outstripping supply, said Mike Mayo of the Pinellas Realtor Organization.

Stock market-wary investors have been putting more money into real estate. Property speculators, low interest rates and loose lending practices have fueled the rush to purchase homes.

Relief in the form of a housing market collapse is a remote possibility in coastal Pinellas County, Mayo said. The warning signs of a bursting bubble - speculators leaving the market and an increase in supply - aren't there.

The boom comes as existing methods of housing assistance are under strain.

In 2001, Pinellas received $5.3-million from the state for housing rehabilitation loans and down payment assistanc e for low- and moderate-income earners. The money is split among the county, Clearwater, Largo and St. Petersburg. This year, the state gave $3.8-million, a 28 percent reduction.

Even as funding has been cut, the money itself is not going as far because down payment costs rise with home prices, said Howie Carroll, Clearwater's assistant director of housing. That reduces the number of buyers Carroll can help.

"It's a vicious dynamic right now," he said.

* * *

Kristie Mack checks real estate listings every day.

Mack, 31, used to work for the Pinellas County Housing Authority and a nonprofit that helps people find affordable rentals. In January, she got her real estate license, thinking she could help her former clients buy homes.

So far, it's slow. Everything on the market is too expensive.

She and her husband Jeff, 33, rent a duplex in Clearwater. Jeff works for the city of Largo as an electronics technician. Their 9-year-old son Aaron attends Curtis Fundamental Elementary School.

The couple both have college degrees. They have been preapproved for a $160,000 home loan. Their cars are paid off. Student loans are the only significant debt they carry.

Yet their search for a house has gone nowhere.

"It's hard for us," Kristie Mack said. "It's like we are right in between. We don't make a lot of money, and we are not poor. Just the average middle-class family. And we can't afford housing."

The couple wants to have a second child, so they need at least a three-bedroom. Homes that fit the bill in their price range are either in crime-plagued neighborhoods or in terrible condition, Mack said, needing thousands of dollars in renovation.

For the Macks, the home hunt has been painful. They want their son to grow up in a house. They have even thought about moving to Pasco County to find cheaper housing, but that would mean a change of schools for Aaron and a costlier commute for Jeff.

"It's just real tough," Kristie Mack said. "It makes you feel helpless."

Realtor Duke Tieman is trying to find a home for the Macks. He is one of a shrinking number in the business willing to work with buyers who have been approved for loans of $160,000 or less.

"It's just unreal," said Tieman, who has been in Pinellas real estate for 18 years. "I still stick with the working class of people; it's just hard for me to find merchandise for them."

Matthew DeLaMeter, who arrived in St. Petersburg from the Dallas area in July to teach school, hoped to buy a home in the $110,000 to $130,000 range, pretty easy to find back in Texas.

But Realtors have not shown much interest in the 28-year-old, who now rents.

"When they find out that I'm a teacher and what my income is," he said, "they don't really have a whole lot to say to me after that."

It's not only prospective buyers but businesses that are affected.

Tim Johnson, director of housekeeping for Tradewinds Island Resorts in St. Pete Beach, said his workers used to find rentals in St. Petersburg, but are now moving to Largo, Clearwater and Manatee County in search of something affordable.

They rely on public transportation to get to and from work. A one-way bus trip can last two hours, Johnson said, and the hassle contributes to tardiness and absenteeism.

"It has gotten to be more and more of a challenge," he said. "The epidemic is just growing."

Mayo, of the Realtor organization, is on the work group coming up with possible solutions. He describes the situation as a crisis.

"The people that run this community need to make a decision: Do you gentrify, or do you take the steps you need to provide housing for your workers?"

* * *

The policy options that will come before the County Commission have gained popularity across the country as communities confront the need for below-market housing for service workers and the middle class.

County Commissioner Bob Stewart agrees a serious problem exists. But he is wary of acting too quickly and creating the impression that government can solve the problem without help from the private sector.

"I don't want to establish any false expectations," Stewart said. "Whatever we do that we don't do now is going to be a positive step. But it's not going to be a cure-all."

To be effective, a combination of measures should be used and adopted countywide, said Anthony Jones, Pinellas' assistant director of community development. Those in the work group are confident that the county and cities can overcome turf wars and arrive at shared solutions, he said.

Here are some approaches that will be considered:

The county and cities could pass an inclusionary zoning ordinance, which would require developers to set aside a percentage of their new units for sale or rental at below market rates.

--Developers could opt out of the ordinance by paying a fee that would support a community housing or land trust fund. Such trusts could also be fed by a levy on property transfers or by fees developers are charged in exchange for being able to build extra units on an acre.

--The county could dedicate a portion of Penny for Pinellas sales tax revenue to build housing.

--Development standards could be changed so that density and zoning rules don't prevent a well-designed affordable housing project from being built.

Housing and land trusts, in use since the 1980s in places like Burlington, Vt., and Montgomery County, Md., can be a particularly versatile tool to lure the private sector.

For example, money from a housing trust could be used to match contributions by large employers such as hospitals and the resort industry. The pooled money could be used to build employee housing.

By securing land in a trust, parcels could be given free to developers in exchange for building affordable units. Needing to cover only material and labor costs would be an incentive for developers to take part.

These methods are being explored in Sarasota County, where commissioners have created a housing trust. They plan to sell some county-owned land to get seed money, but the trust has no dedicated revenue source yet and has built no homes.

Sarasota leaders have also committed to creating an inclusionary zoning ordinance. But they have given themselves two years to do so, and officials have not decided how aggressive the ordinance will be.

"When you start to think about policies such as this," said Wendy Thomas, Sarasota County's community housing manager, "you need to give people, including elected officials, time to consider whether they are right for the community."

County Commissioner Ken Welch, a Pinellas native, understands the need for a thoughtful approach to policy proposals, but is unwilling to wait needlessly.

"We need to act and we need to act decisively," Welch said. "Pinellas County is for everyone. And I don't want to see us get to a point where it is only for the rich."

[Last modified October 2, 2005, 05:02:51]

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