For some inexplicable reason, I have always wanted to own my own home and my own business. For me, this is the quintessential American Dream. Many Americans have the dream of home ownership. You own; you are a winner, you rent; you are a loser. It is a stigma that plaques us. These expectations and the rapid rise in housing costs has led us to The Affordable Housing Problem.
Homes are not affordable to those that work here. There is a disconnect between wages and housing costs. I read about it almost every day in the paper. Our expectations are that we should be able to own a home. When we find out we can't, we are disappointed. This is a Bad Thing. It gets negative press. It makes us angry and stressed.
Renting is one solution to the affordable housing problem. Change expectations and the stigma that renting is bad and show your workforce that indeed in today's real estate market renting is in fact financially wise, and part of the problem is solved. Changing expectations takes time however, and Lord knows we want to solve the problem immediately, heck, we live in America, the land of quick fixes.
The high number of apartment complexes converting to condos is decreasing the inventory of rental apartments. Correct? I am not so sure about that. It is certainly changing who OWNS those apartments, but my observation is that there will be many more rental condos on the rental market next year than there were total rental apartments on the market last year. All these investor units will enter the rental pool. The prices will be higher that the current aprtment complexes, but still substantially lower than the cost of home ownership.
The developers of new condos are accused of catering to the rich. To punish them and to put a band aide on their conscience, the politicians make them donate a chunk of money for each unaffordable home that they build to go to an "affordable housing pool". This money then gets, well, lost in the system and doesn't help the problem. So far all I see it accomplishing is raising the cost of the already unaffordable home.
Do we have an affordable housing problem? Most would agree that we do. Most employers are concerned about where their employees will live. How to attract them. How to keep them. We are in the apex of the problem now and it is hard to see the big picture.
The market will solve the problem.
What should NOT happen is artificial government imposed fixes. What we need is to allow the market to adjust and:
Wages will need to go up. Employers will have to pay more to attract employees. This is already happening. It is just not quick enough to please everyone. But these wage adjustments must seek their own level naturally. But the way, it does not all need to be wage related. Some of the benefits will be increased child care, transportation, health benefits, education, etc.
Housing and rental prices need to stabilize. The market will also take care of this. I have a great deal of confidence in the free market system. We just need to allow it time to work.
We need to allow an increase in density permitted on land. The more housing units allowed per acre, the less impact on all services and therefore the lower the cost of the living unit. More density means less roads and infrastructure and less costs overall.
We also need to encourage renting in our society. Let me talk a little about that. I know a gentleman that is renting a condo on the water for $1600 per month. In fact, he could afford to buy where ever he wants. But why should he when he is renting an $800,000 condo for so little? The market here is in a stage of flux and certainly not stable when it comes to renting. But I know there are many wonderful opportunities to rent in today's investor driven market.
There have been a few studies done by The Organization for Economic Cooperation and Development (OECD) that tend to indicate that the percentage of home ownership in a country is directly related to the unemployment rate; the higher the percentage of home ownership, the higher the unemployment rate; more renters, more jobs.
The American Dream has been achieved by 68% of Americans, but in Spain the number is 83%, Germany 42%, Japan 60%, and in Switzerland only 31% of the population owns their own home. Greece has 83% home ownership. Based on this and other studies, the OECD has data that shows a correlation between home ownership percentages and unemployment over the years. The reason? A renter is more mobile and can respond quickly to changing job opportunities. So as far as the work force is concerned - renting is good.
In summary, my conclusion is that we have a short term problem that will be solved by natural market forces. Employees will rent, employers will pay higher wages, density will increase, and the Spanish, I mean American Dream will survive.
Let me bring this home to my readers who really are second home buyers, retirees, and real estate investors in general. What does all this mean to you? It means there will an adjustment in the market in terms of wages. If you are investing in Florida you need to understand the trends and make your buying decisions accordingly. There will be a demand for rental housing. There will be increased density. There will be fewer employers here that hire low wage workers because wages must and will go up. My building call CYPERLIN CENTER, for example, is not trageting the employer that needs low cost employees. It is targeting the luxury home buyer who wants a luxury place to work as well.
I will repeat the mantra I have repeated so many times, however. The Baby Boomers are still coming. They want homes, they want places to shop and eat and play. Our prices, while high, are lower than other areas of Florida. South West Florida is still paradise. The time to buy is now.
The Lee County Economic Development Office has a fantastic website you must visit if you are interested in Commercial Properties here, www.leecountybusiness.com. Take a tour.
Speaking of Commerical Properties. We sold four Brantley Commons building this past week to investors. Email Tatiana if you want more info on these opportunities.
We are still about the weather and the water here and we have some wonderful opportunities. Check out Gregg's pick of the week here.
Speaking of the Paradise, here are two new listings that you need to see:
http://www.investinwaterfront.com/bellaterraresales.shtml - great location off Corkscrew Road in Estero, near FGCU and Miromar Outlets - Bella Terra - $289,000 - 2 bed/2 bath condo with carport on a lake.
http://www.investinwaterfront.com/garnickpropertyhighlight.pdf - only 4 miles to Ft. Myers Beach - 3 bed/2 bath condo with resort-style pool and amenities - $289,000
Now some bragging. My son Christopher and his partner Leon started their own advertising agency third quarter last year. Gail and I attending the ADDY awards ceremony two weeks ago with Christopher and Leon. After less than a year in business Devious Design Studios took home more awards that any other ad agency in Lee and Collier Counties. You can see their work at www.DeviouslyCreative.com.
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