Overregulation, Not Elections, Slows Florida Housing Market Recovery
Florida’s current economic and regulatory environment work against a speedy recovery from the housing depression.
To echo the statement made by Florida Office of Economic and Demographic Research Coordinator, Amy Baker, during the National Economic Estimating Conference on November 14, Florida’s economy is heavily dependent on construction making a come back, which seems slow in its revival.
Many credit the presidential election for continuing to weaken the homebuilding market, making housing forecasts for 2017 relatively indeterminable. However, obstacles to increase the construction industry has little to do with the White House and more to do with overregulation in Florida.
With multiple state and local governing bodies requiring differing seals of approval, a builder can expect to wait an average of five-six years following the purchase of land to begin actual development of property.
Local municipalities seek to increase impact fees; a tax imposed on all new construction to defray the cost of services such as schools, parks, roads, ambulance and fire service, and other infrastructure needs. Currently, impact fees on a new home could be as high as $20,000. This additional pre-construction cost is expected to increase by as much as 34%. According to the National Association of Home Builders, in Florida for every $1,000 increase in the price of a home, over 8,000 households are priced out of the market for a median-priced new home. As a State desperate for an improved economic environment, it is time to ask if assessing impact fees justifies putting the dream of homeownership at risk.
In light of the recent Supreme Court ruling, builders now have an uncertain Workers’ Compensation Insurance market. The newly ruled 14.5% increase in compensation rates will cripple the construction industry, far beyond other industries impacted by this new ruling.
State and national economists agree that building in Florida is the backbone to our economic recovery. Knowing this, builders are hard pressed to make any ground for improvement without regulatory relief.
The Florida Home Builders Association, during the 2017 Legislative Session, will put forth a package of proposals to address these issues and seek to reinvigorate Florida’s construction economy.