High housing costs are causing some Floridians to make tough choices
High housing costs are causing some people living in Central Florida to make tough decisions in order to save money.
Kevin Gallagher moved to an apartment in Deland six years ago to work in the aerospace industry and his rent has almost doubled since.
He still has his home in South Carolina where his wife currently lives.
Gallagher said he has had to cut back on trips to see his wife because of how expensive rent and everything else is.
"It's a good 50 gallons worth of gas for me to drive 1,000 miles round trip," he said. "And with the increased cost of housing here in Florida, I don't have the opportunity to spend as much on gas and things to get back."
Here's the full conversation with Kevin:
Randall Croom is an Associate Professor of Management at Stetson University.
WMFE's Talia Blake caught up with him at his office to see how high housing costs are impacting Floridians ability to spend on other things.
Listen to the full conversation in the player at the top of the page.
Randall Croom: Home prices have gone up and incomes have gone up, but home prices have gone up far more than incomes have. So the real amount of money that people have to spend is less. If you're renting, your landlord is going to pass those costs on to you so that they can cover things like the increasing home insurance in the state of Florida and other issues. So there's going to be less disposable income. You also don't get the real or emotional psychological boost of saying, 'yes, prices are going up. But I own a home. And so I, I have an asset that's appreciating in value.' If you're renting, you don't get to experience necessarily that same psychological benefit.
Talia Blake: How could that impact the economy at large here in Central Florida, the state that we're in right now, with housing and consumer spending?
Randall Croom: One of the things that we might see is a big bifurcation or a larger bifurcation between, I hate to say, haves and have nots. But, for some people who have household wealth or incomes that are far in excess of what they need to spend, or frankly, people who bought at a time where interest rates were lower, and now really don't even want to move because their mortgage payment would be significantly different. Some of those people may continue to spend. Their household sort of housing expenditure is locked in, and because of interest rates being as low as they were a while back, they may remain locked in for some time. But on the other hand, people who are buying today or who are renting today, they may spend less on activities and other things because they just have less real income. I mean, this is true, not just because the price of housing has gone up and the wages have not kept up, but also because of inflation, just the real difference is significant. At some point in time, people just have less money. The other thing to watch is beyond consumer spending ability, you also have to consider consumer confidence. For people who are paying attention to the price of eggs going way up, and milk, rice, and all these other things that are really increasing all around the board. There may be signals to them, that maybe 'I shouldn't spend as much right now. I need to be more cautious and more careful, because my sense of things is that the price of everything around me is really going up.' So, if you're already spending a larger part of your monthly take home income on housing, and you're spending a larger part of your income on necessities that have been hit by inflation, just the way the math works out, you have less money to spend on other things. And that might have an impact on proprietors or businesses that sell things that people perceive to be optional or things that people could replace with other activities or things. You can replace, for example, and just an oversimplified example, you can replace going to a football game with watching that same football game on television, but you cannot replace electricity or eggs or whatever else with something else.
Talia Blake: As we've talked about, wages have yet to catch up with the cost of living in Florida. If this trend continues, what could that mean for people living here?
Randall Croom: Some of that is going to depend on what the cost of living is like in other places. Florida has benefited in many ways from people moving from places where there is a higher cost of living. But if that phenomenon holds, then logic also suggests that if our cost of living is really untenable for people, they would similarly look for other places to live that they found to be affordable for them. So longer term, I do think that's a trend to watch. We've benefitted from it in the past. We have to make sure that we're not going to be cut with the other side of the sword in the future.
Talia Blake: How much money do people need to be making here in Central Florida for the cost of living to be considered affordable?
Randall Croom: The state of Florida is ranked number 30th for highest living wage. Hawaii has the highest living wage and Mississippi is the lowest meaning you need the least amount of money to live as an individual person in the state of Mississippi as compared to here. But a living wage in Florida has been estimated to be $57,064 to cover all of your expenses if you are a single person. The average salary in Florida, at least according to ZipRecruiter, is $48,620, suggesting that the average salary is below the living wage to cover all of the expenses if you live in Florida.
Talia Blake: What needs to be done to fix this problem?
Randall Croom: That is a complex question with complex multifaceted answers, but here are a few ideas that I might suggest based on some things that scholars have have looked at, some economists have looked at, and some activists have looked at. One of the things that we could do is increase the number of high paying jobs, and we could also think more about paying people living wages regardless. We can also think a little bit more broadly about sort of public safety nets. They're also some probably more creative ideas that people could consider. For example, building cities in which public transportation is more easily accessible so that a car is not a necessity, would actually reduce the amount required to be able to live in a place, for example. We can also talk about making sure that we are really careful from a policy perspective, and intentional about reducing sort of predatory loans and predatory debt. Those things increase the cost of living for people, and make it very difficult for them to move forward. One way to help people get paid more is by ensuring people are educated. So providing access to quality education at an affordable price in our state schools in which people are not — A: having a tough time choosing to go because they're not sure if they can afford it, and B: not so worried about being saddled with debt if they do go and then of course, paying that out for a really long time. But actually, if we're going to talk about housing, you also have to talk about homelessness , or unhoused people, who are not often who people think they are. The image that people have of an unhoused person is a panhandler standing at the intersection of two streets. They're not seeing the family who is sleeping in a car or a van, or bouncing around from motel to motel each night. That is one of the important sort of consequences of our housing crisis.
Talia Blake: Based on what you're saying, do you think that if we continue on the path that we're going down right now when it comes to affordability in Florida, that we're going to see more people unhoused in the future here?
Randall Croom: If I had to make a prediction, and making predictions is a dangerous business, it really is, but the reasonable and logical conclusion would be that we see more and housed people. A lot of people are one paycheck away. They don't have six months of living expenses or three months of living expenses paid. The working class can be really fragile in many parts of our state and country. So I think that not just for economic growth and development, although that is going to be a significant outcome of taking care of housing. The housing crisis needs to be addressed all around from a supply, affordability, insurance cost, safety, and adequacy perspective, if we're going to continue to be able to thrive economically.