Statewide Growth Management and Housing Affordability in Florida

Florida is recognized as a national leader in the “Smart Growth” movement. The state has given housing goals a special prominence in regional and urban planning, explicitly requiring its cities to plan for a diverse range of housing needs and types.

However, a growing body of research strongly suggests that some of the goals of Smart Growth’s advocates may be inconsistent with the realities of housing development. To the extent that more compact, higher density urban development is encouraged through growth-management laws such as Florida’s, higher housing prices could result.

In fact, despite statewide planning goals and programs designed to promote affordable housing, housing costs have been increasing in Florida faster than the national average. According to the National Association of Realtors, home prices in Florida exceeded the national average for the first time in 2005.

Housing price increases have outpaced income growth. Indeed, since 1994, housing price inflation has outstripped income growth by a factor of two to one. Not surprisingly, housing affordability has suffered.

Housing affordability in Florida tracked the national average for much of the 1990s but declined significantly after 2000. Florida’s housing opportunity index – a measure of how many households can afford the “median” home based on income and housing price — has eroded sharply, particularly since 2005, falling well below the national level by 2007. While affordability nationwide was just over 10 percent lower in 2007 than in 1991, affordability in Florida has plummeted by more than 50 percent over the same time period and has eroded by nearly 60 percent since its peak at 80.7 in 1994.

Despite these trends, few analysts have examined Florida’s statewide growth management law and its impact on housing markets and prices. This is surprising because a large body of research has shown that local and statewide regulations on development significantly impact housing production and costs. Among the handful of studies that have examined Florida’s housing market, one conducted by Reason Foundation in 2001 found that Florida’s Growth Management Act (GMA) may have contributed as much as 20 percent to rising housing costs between 1994 and 2000.

This report updates and extends that previous study by analyzing housing price data from 1990 to 2006. A statistical analysis of housing trends in the 56 of Florida’s 67 counties found that as much as 16 percent of housing price inflation can be attributed to planning under the state’s GMA, a result consistent with previous analysis and research.

Samuel Staley is Research Fellow

Leonard Gilroy is Director of Government Reform

This Study's Materials






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