home prices | Your Delray Boca

The bar is high for home buyers and renters.

Editor’s note: Today we mark Juneteenth. Juneteenth is a federal holiday in the United States commemorating the emancipation of enslaved African Americans. Deriving its name from combining June and nineteenth, it is celebrated on the anniversary of the order by Major General Gordon Granger proclaiming freedom for enslaved people in Texas on June 19, 1865.

Recently, I bumped into a friend who runs an essential government agency.

I asked him how things were going. He sighed. It was a loooooong and loooooud sigh.

“I’m understaffed and the staff I have is underpaid,” he said. “Workers can’t afford to live here anymore. We’re doing the best we can, but it’s hard.”

Then he mentioned a news story that broke that morning. He quoted from it, and I was stunned.

Here’s the synopsis from the Sun-Sentinel:

“Renters in South Florida need to make over $100,000 in order to rent comfortably in the tri-county area, according to a new study.

In order to avoid paying more than 30% of their income toward rent, the average household would need to make at least a yearly income of $112,183 to afford the typical rent in South Florida, the study conducted by researchers at Florida Atlantic University, Florida Gulf Coast University and University of Alabama revealed.

“So, if you make less than $112,000 and you live in the average rental place, you are rent burdened,” said Ken Johnson, real estate economist at Florida Atlantic University. “It shows how unaffordable housing is.”

For those making $67,310.30 and under, they would be considered “severely cost burdened,” or dedicating at least 50% of their income to rent.”

Yes, I know things are rough out there. I have kids who pay big time rent—more than my mortgage for far less. Buying something— even a small condo— seems like a pipe dream for a whole generation.

Still, the figures jumped out at me; $112,000 is a big-time salary. How many workers make that kind of money—even if they are married, have a roommate or a significant other?

New teachers in Palm Beach County make $49,133; that’s among the top starting salaries in the state and it doesn’t buy you much. But wait, it doesn’t get better. If you have a master’s degree you can make a whopping $52,133 to start, and if you have a doctorate the salary balloons all the way up to $55,133.

So where do these essential workers live? What about police and firefighters? How about nurses? Retail workers, restaurant staff? What about the people who keep your A/C running, fix your car, patch your roof, or work retail?

What about our children who go off to school and want to come home and begin their careers in Boca or Delray?

Sure, we can blame “greedy developers” for building luxury housing, but what do we think happens when land in east Delray costs between $10- $12 million an acre (not a typo) and buyers are willing and apparently able to pay well over $1,000 a square foot for condos anywhere near downtown. Even out west, where it used to be affordable, prices have soared for renters and buyers.

Add to these powerful —and very real— market forces the lovely philosophy of NIMBYism; which is the knee jerk opposition to every development project that comes before your local council or commission; regardless of whether they meet land use rules.

In addition, the cost of construction has escalated thanks to inflation, and the long approval process found in most cities adds costs as well/

It’s no wonder that Palm Beach County is said to have a net deficit of 20,000 housing units.

But wait a minute, didn’t voters pass a $200 million housing bond in 2022?
Yes, they did. And that equates to $10,000 in gap financing per unit, which while helpful, is a pittance in the scheme of things. There are other issues with the bond, but that’s for another column.

Regardless, there’s no question we have a problem. It may be the challenge of our time, because housing is not a nice thing to have, it’s essential.

As a result, there are some efforts being made.

The state has passed legislation seeking to override local zoning rules and add more housing. I’ve talked to several developers and their views are mixed as to whether units will be produced because of the legislation.

So while the state may have good intentions, if we want to see action, we will have to act locally.

But first, we must decide that we want to solve this problem.

There are people who don’t want to do anything, in other words they are in the boat so pull up the ladder.

We’ve all seen the opposition to apartments and other multifamily housing. The most recent Delray election was about Old School Square and whether candidates were for or against adding places to live for people who work in our community or nearby.

Others acknowledge the issue but feel that it should be solved by someone else—namely another city.

I am not in that camp.

In fact, I am passionately not in that camp. I believe that the people who serve our community should be able to live here. I also believe that if they were given a chance to live here, they would enhance our community by volunteering, voting, paying taxes, supporting local businesses etc.

As for density, it shouldn’t be a dirty word. It’s a more nuanced conversation than labeling it either good or bad. And we need to have that conversation because without adding to our supply, prices will continue to soar, making it hard for essential workers to get traction in our community. That hurts families, businesses, and all of us who rely on services, which is everyone.

It’s about design, not density, my friends. We learned that during the dozens of conversations and workshops we had during the downtown master plan sessions 20 years ago. Then we promptly forgot those lessons.

I know, I know, traffic, there’s too many people living here etc. etc.

Well, here’s my response: can we talk about it? Can we attempt to analyze the situation and craft policies that make sense. Can we use data and get past the tired mud slinging around this important issue?

We must bring planning back.

Visioning too.

Of course, we should not overwhelm our local infrastructure and we must consider mobility.

We should not allow tall buildings downtown. We should insist on quality design and plan, plan, plan.

But to say nobody can live here unless they can cough up tons of money ignores our need for nurses, teachers, restaurant workers, police officers, firefighters, service workers etc.

It’s the law of supply and demand.

Limit supply and watch prices soar. We happen to live in a desirable place, so there’s demand. We do need to make sure that our community has a place for the workforce to live, otherwise we become a playground for the rich.

As for traffic, I would argue that much of it is created by a workforce that has to drive long distances to get to their jobs in our coastal cities.

I live just off Lake Ida Road. When the 284-unit Delray Station was approved, many of my neighbors were concerned that Lake Ida would be gridlocked.

I can understand the concern because getting across Lake Ida Road between 7:30 and 8 a.m. is the most dangerous part of my day— during the school year at least. Now it’s easy.

But I’ve made it a point to go west to see how many cars are leaving Delray Station at “rush” hour. I’ve never seen more than 2-3. This morning there was one car.

These days people may work remotely, or they work a hybrid schedule, or they work staggered shifts.

Delray Station has not added much to Lake Ida’s traffic woes. It’s commuters not residents who are clogging our roads.

By the way, a one-bedroom at Delray Station can be yours “from” $2,550, 3 bedrooms are $3,428. It’s not inexpensive to live off I-95 and Congress either. They are very nice apartments but that’s a lot of money.

When it comes to development, we get emotional and it’s understandable—to a point.

Again, we should never mess with height limits downtown; our scale is our charm. But we need to figure out where our workforce can live. And we don’t have the luxury of saying, “the heck with that, they can live in the Everglades, or in Port St. Lucie, or in Boynton Beach or Lake Worth Beach.”

We should want the people who serve this community to be able to live in this community.
Back in 2005, the original Congress Avenue plan strived to address this issue. That’s right, 18 years ago, there was already a housing affordability crisis. The plan allowed for a mix of uses on the Congress corridor, to take pressure off the downtown, build the tax base, and give workers an opportunity to live in Delray Beach. Traffic was a consideration and road capacity was studied. It was determined that Congress could handle additional development. It still can.

The Bexley Park neighborhood (the city bought the land and put it out to bid for workforce housing), the creation of the Community Land Trust and other initiatives were also attempts to create opportunities for workers and families. Good efforts all—but not enough to meet either the need or the demand for housing.

So where do we go from here?

I would suggest a visioning process, in which we as a community, sit down and have a conversation that allows for emotions but makes room for facts.

It is time to have a serious discussion about housing. The problem won’t be solved overnight, and market forces are strong. But if we continue to restrain supply, we will continue to have a problem. Mobility needs to be a big part of the conversation, not to mention water and environmental sustainability.

Sprawl is not the answer to any of these concerns, nor is paving over what’s left of the Ag Reserve.

Again, we should want the people who serve this community to be able to live here. As someone recently said, “if your barista can’t live within 30 minutes of the coffee shop, you don’t live in a community, you live in a theme park.”
Same for police officers, firefighters, nurses, teachers, servers etc.

Delray has always prided itself on tackling challenges. This is a big one, but pretending it doesn’t exist or hoping that a neighboring community will solve our needs won’t work.

Delray’s Community Land Trust is an innovative organization supported by the Delray CRA and others.

The headline was a grabber: Are You a Millennial Looking to Buy a Home? It Could Take Up to 32 Years.

Only 32% of the country’s largest generation (which consists of 75 million Americans) own homes. Those that do are flocking to interior markets, which tend to be cheaper and more cost-effective than most coastal markets. In our neck of the woods, that might mean the western fringes which creates sprawl and traffic as workers head east for jobs. But even out west, higher end homes seem to be the order of the day and many of the communities cater to the 55 and over crowd. Redfin recently reported that the 33446 area code (west of Delray) is pacing the nation in price appreciation.

As the front line of millennials enter their mid-30s, financial security is not guaranteed. Instead, the generation is beleaguered with student loan debt (which exceeds car and credit card debt) and salaries that are 20% lower than what their baby boomer parents earned at the same age, according to a report by real estate research site Abodo.

The average net worth of a millennial is $10,090, or 56% less than what it was for baby boomers at the same point in life, according to Federal Reserve data.

Coupled with rising home prices, it could take decades for a millennial to be able to afford a down payment on a house in places like San Diego or San Francisco. This may be why more millennials live with their parents than any other generation in the last 130 years, according to Bisnow Media.

Millennials living in the country’s biggest cities, including New York City, Boston, San Francisco and Los Angeles are especially challenged.

The average millennial makes $40,500 per year. Using that average, were one to save 15% of her income each year, it would take just over 18 years to save enough for a 20% down payment on a home in Boston. It would take 32 years for a millennial to afford the average $112,000 down payment for a home in Los Angeles. And as the father of a few millennials who are gainfully employed (thank goodness) I have a hard time believing that even the most frugal and disciplined young person can save 15% of their income.

The picture in South Florida is not much different than some of the aforementioned hyper expensive markets.

I remember moving here when I was 22 and thinking that relative to New York and the Northeast, Florida was very affordable. My car insurance was lower, home prices were reasonable, there was no income tax and property taxes were much lower than my native Long Island. Even homeowners insurance was nominal at first—before changing after Hurricane Andrew.

Still, according to researchers at Abodo, Florida as a state remains much more affordable than other parts of the United States. It would take 5-10 years for millennials to save up.

Hence, the desire for developers to build apartments and the willingness of underwriters to finance deals. However, finding sites in built-out and expensive Boca and Delray is challenging. With land prices soaring, rental rents are also rising and the uncertain regulatory environment (costly, lengthy and torturous entitlement processes, toxic politics, NIMBYism and an aversion to density) make it even harder for millennials to strike out on their own.

Another headline in USA Today recently also grabbed me: Where Did All The Starter Homes Go?

The article cited a byzantine maze of zoning, environmental, safety and other requirements that has led to a 35% decrease in housing construction across the country from previous levels. According to economists cited by USA Today, the lack of supply has driven up home prices by 40% over the past five years.

Single family home construction suffers from a lack of available land and a lack of skilled construction workers, according to the National Association of Realtors. Banks are also tougher on borrowers as a result of the housing crash in 2008.

The perfect storm has led the National Association of Home Builders to sound the alarm. The NAHB says that from 2011 to 2016, regulatory costs to build the average house has increased from about $65,000 to $85,000 and now represent 25% of the cost of a home.

Of course, we need regulations as long as they are necessary, fairly priced and serve a public purpose.

Still, the inability of millennials to gain a foothold in our community should be pressing concern for public and private sector leaders.

It’s important for companies to be able to recruit workers in order for the economy to grow. Workers, young families, entrepreneurs and established companies look at housing prices, quality of life, quality of schools and cultural amenities before making a decision on where to put down roots.

Unfortunately, the word density has taken on a bad meaning. But, truth be told, density done well (i.e. properly designed for great buildings and public spaces) is essential for cities such as Boca Raton and Delray Beach. Compact and walkable development is better for the environment than traffic producing sprawl which serves the needs of cars over people. It also allows for young people to form households and become part of the community injecting needed ideas, life, energy, monies and volunteer hours which make cities work.

The recent changes to Delray’s land development regulations for the downtown core which capped density at 30 units to the acre, was a big mistake. It virtually guarantees that millennials—who seek walkable environments and don’t want to be car dependent—can’t live downtown. By limiting the supply, you jack up prices and we end up with an eastern core that’s shut off to all but the very wealthy.

The 2001 Downtown Master Plan, which did much to build on the 1990s Decade of Excellence, was a community wide education effort that encouraged well-designed projects versus a fixation on density numbers. We saw visual examples of ugly low density housing and also saw attractive higher density projects which have the added benefit of increasing your tax base while also adding residents who can support local businesses. That was the guiding rationale behind the push to add downtown housing. We wanted a sustainable, year-round downtown.

The other areas that make sense to add attainable housing for millennials and others is North and South Federal Highway, Congress Avenue and the “four corners” of Atlantic and Military, which has zoning allowing for a mix of uses. The four corners zoning—done over a decade ago—will become increasingly important as we see pressure on the retail landscape increase with big box chain stores being driven out of business by ecommerce.

Delray is ready to offer shopping center developers more options for their properties should they decide to invest and change course.

The best incentives are not monetary—which almost always leads to an arms race you can’t win with companies taking the money until a better offer comes along. Rather, the best incentives are zoning, a tough but fair and timely approval process that emphasizes design and good uses and enough density to give the next generation a chance to access your city.

We were always ahead of the curve—which is why Delray succeeded. It’s important we stay there or we will be left behind. Right now, we’re losing ground.

The Challenge Of Our Times

Housing For Young People Needed