Florida families can’t buy homes — your city or county helped make it that way | Opinion
Homeownership is a pillar of the American dream. Unfortunately, many young people see this as unattainable. While blame is placed on institutional investors or big banks, fueled by populist rhetoric from politicians and news outlets, young people — especially young families — should recognize the role the government has played in driving up housing costs.
Florida has made housing affordability progress, but local governments continue driving up costs through delays, fees and other regulations, restricting the supply of homes being built. Additionally, exorbitant property taxes are driven by excessive government spending, further squeezing potential homeowners out of the market. As a young Floridian, I believe we should be pushing for substantive housing reforms.
According to Miami Realtors, the median home price in Miami-Dade is $685,000, making a 20% down payment $137,000. This is frustrating considering the median household income in the county is $76,000, according to the U.S. Census. For young families, the down payment on a house is a massive undertaking, often leading them to place down payments of less than 20%, burdening them with private mortgage insurance (PMI) and higher monthly costs.
Many believe greedy investors are inflating prices by buying up homes, or that current prices reflect the natural market price, but neither assumption is accurate. The National Association of Home Builders estimates government regulations account for 25% of a new single-family home’s cost. Though some states make this number larger, even business-friendly Florida is not exempt from burdensome regulations.
What regulations are driving up home prices?
Minimum lot sizes imposed by local governments restrict the type of homes that can be built. Various zoning districts in Miami-Dade determine lot sizes for homes, meaning some areas have more flexibility. Miami-Dade and other counties should consider drastically reducing or eliminating lot size requirements.
In Houston, Texas, the minimum lot size is as low as 1,400 square feet, which has greatly spurred new construction. A search on Zillow for new homes in the Houston metropolitan area shows that the fruit of this policy is nice, affordable homes, many under $250,000. Many of these homes are unique and smaller but serve as great homes for young and small families. Local governments should be careful dictating what homes families want to own.
Local regulations regularly hold up home construction, increasing labor costs, financing expenses and the overall home price. For builders, time is money, but local governments don’t feel pain in their pocketbooks. In Miami, it typically takes between six and eight weeks for single-family development approval, according to Cove, an architecture firm. Localities should streamline their process through simultaneous review to maximize output.
Impact fees, which are meant to cover local infrastructure costs associated with new development, are a huge factor in a home’s final cost. Impact fee schedules and terminology vary by county, causing confusion for developers and slowing home supplies.
A huge part of the problem is when impact fees don’t factor in the size of the home. In Fort Myers, impact fees make up $16,997 of a single-family home’s cost, regardless of size, according to city data. As a result, builders forsake starter homes to build larger homes that offset impact fees. Poor impact fee policy isn’t confined to Fort Myers; localities need a proportional impact fee system that adjusts for square footage.
The bottom line is: Local governments assess your home’s value and then tax you after inflating its price through fees and regulations. That should frustrate everyone, especially young families eyeing homeownership.
This leads to the other piece of the affordability puzzle: property taxes. While solutions proposed in Florida might help some homeowners, tax burdens will shift to others. An outright elimination might help homesteaded properties, but renters and businesses would pay. A realistic solution lies on capping how much total property tax revenue a local government can collect by using a simple formula tied to a previous year’s revenue, inflation and population growth.
The government is restricting the supply of homes, intentionally or not. Whether through lot restrictions, impact fees, delays or property taxes, local governments are slowing growth while young families wait.
Logan Bragdon is the coalitions manager at The James Madison Institute.