Speculating on Affordable Housing

There is a lot in the news lately about real estate prices, speculators and whether there is a bubble and if it will burst.

On the Sarasota scene we read commentary from William Seider, a real estate lawyer from the firm Williams Parker Harrison Dietz & Getzen. He comments "For the first time since perhaps the 1980s I think that a majority of our condominium product is being sold to speculators, which is a troubling concept. Brokers are showing up not to bring buyers, but just to buy for their own account, and with the intent of never actually closing on the unit but 'flipping' the contract."

He also advises new speculators to be very cautious.

Further away, but still in Florida, the Miami Herald has published an excellent series about the current massive building boom there and the speculation that is going on. Comments like:

• "Citywide, developers are proposing more than 61,000 new condominium units -- eight times the number built during the past decade"
• "Development underway here in Miami that is unprecedented, bigger than anything, bigger than Hong Kong in the boom years of development"
• "It also raises serious concerns. In the absence of a ready plan, how will the city cope with thousands of expected new residents and the traffic they will generate, given antiquated infrastructure, limited public transit and a shortage of parks and open space? Will Miami residents, among the nation's poorest urban dwellers, be displaced or priced out of new housing"
• "Then there is the other factor, anecdotal and unquantifiable: the speculator. "
• ''As much as 85 percent of all condominium sales in [downtown Miami] are accounted for by investors and speculators,'' housing analysts at investment firm Raymond James warned in a March report.
  Banks have started to back off lending on condo projects, or have instituted new rules to avoid giving mortgages to investors"
• "Spiegelman sold the condo units in the Marina Blue condo going up on Biscayne Boulevard.
  ''One hundred percent of the buyers were investors and speculators,'' he said. "Anyone who tells you their projects are different are deluding themselves.''
• "Yet there's relatively little in the new downtown priced for working families. ''The missing link here is in creating housing that the middle class can afford,''

What is happening in Miami is mirrored here in Sarasota, albeit on a much smaller scale. We face the same issues: there is no infrastructure in place to handle the expected growth; traffic and parking issues are significant. Affordable housing in far away locations (North Port?) will result in either more cars and parking requirements as workers commute from further away or simply a loss of people willing to work in these conditions.

Meanwhile back in the newspaper we read in Rod Thomson’s opinion column that some in Sarasota are worried that their children will not be able to afford a home here. "The county should dismiss the blathering negativists and look at all options for opening up housing that the next generation can afford while protecting current assets." He offers the concepts of waiving road capacity requirements in the name of affordable housing as well as indicating that our county program of acquiring environmentally sensitive lands adds to the affordable housing crisis.

The real question, of course, is why do people want to live here? The answer is that it is a very desirable place to live, driven in a large part by the environment. Covering the land with concrete will make Sarasota an undesirable place to live and will naturally decrease the housing demand and lower prices. That is not the reason I want to live here. Allowing substandard infrastructure (roads, etc.) is absolutely the wrong way to maintain quality of life (have you read about North Port’s road problems lately?). If this is "blathering negativism" then count me in.

An important factor, if not the major factor, in driving up home prices is the artificial demand created by those who have no intention of living in the home - the speculator. While Mr. Thomson is right about supply and demand, his demand answers need more scrutiny - making Sarasota undesirable and disregarding the effect of speculators is not the way to bring about positive change.

Both the county and city are looking at concepts for making land costs less expensive (land trust); what this does is remove the speculator effect. This is a positive step. My only complaint is that it is taking so long.

Another positive step would be to reduce the cost of housing construction. Density is one way to do this. There is another way to significantly reduce construction costs that does not require density changes. This is to use modern "factory built" home construction techniques. These techniques produce higher quality results than traditional methods and allow a number of styles capable of blending with almost all neighborhoods.

There is a least one very capable fellow in Sarasota working on the concept of forming a non-profit organization that would provide high quality home manufacturing to go along with land trust concepts thus providing an affordable, high quality home for middle class buyers while shutting out the speculators. This is a very positive step indeed, not the usual hand wringing inaction we usually see or the name calling that is used to typecast those that refuse to give in to "business as usual".