Economy Matters

Brevard County civic and business leaders emphasized that a scarcity of affordable housing is fueling a brain drain of mid-career educators who quit the classroom for higher-paying positions in other sectors during a recent roundtable discussion with Raphael Bostic, president and chief executive officer of the Federal Reserve Bank of Atlanta.

The discussion came in April during the latest of Bostic's visits around the Sixth District to gather firsthand information about local economic conditions and share news from the Bank. Bostic highlighted two points that helped guide the roundtable's conversation on housing affordability in the county.

First, he put the county's housing situation into a national context. Communities across the country are experiencing a housing shortage, adding to upward pressure on prices for dwellings once within reach of households earning the salaries of teachers, police officers and firefighters, and those in skilled trades. During and after the pandemic, home ownership became increasingly unaffordable for these median-income households as prices spiraled upward, according to the Atlanta Fed's Home Ownership Affordability Monitor. The Atlanta Fed's Southeastern Rental Affordability Tracker presents a similar portrait regarding rental housing affordability.

Second, Bostic asked the roundtable about potential solutions. "Pricing is always about supply and demand," he said. "When demand is higher than supply, the price goes up. The question is where the new supply is coming from. Is there a strategy or energy or focus?"

Brevard has nascent strategies to both raise teacher pay and subsidize workforce housing development. In November 2022, voters responded with overwhelming support of the school district's call for an increase in the property tax rate. Funds will provide across-the-board pay hikes intended to improve recruiting and retention of educators and noncertified school employees. And, they approved a ballot measure to create a trust fund to establish affordable housing for vulnerable families.

County commissioners have also provided $2 million in affordable housing start-up funds that are to be supplemented over time with proceeds of surplus real property sales and other sources to be determined by the commission.

For the most part, however, roundtable participants noted that new houses are unaffordable to those at and below the county's 2021 median household income of $65,333. The total cost of housing, utilities, and basic living expenses raises the financial pressure on teachers and others with similar incomes. One indication is the growing number of calls to a nonprofit that specializes in helping working families stay housed.

"We served, in 2020, 375 families. In 2021, we served 500 families. In 2022, we served 1,500 families. In 2023, we anticipate serving 2,500 families," said Tara Pagliarini, executive director of Family Promise of Brevard. The nonprofit is part of a national organization that works with families living paycheck to paycheck and households that fit the United Way acronym ALICE (asset limited, income constrained, employed), earning more than the federal poverty level but less than the amount needed to cover basic living expenses.

Brevard County's housing scenarios include three examples:

Major master-planned community

Viera in central Brevard sits on 20,646 acres that straddle I-95. The project has found a sweet spot in the market, ranking in the nation's top 10 master-planned communities in terms of sales in 2022 sales, according to national real estate advisory firms RCLCO Real Estate Consulting and JohnBurns Real Estate Consulting.

Viera was intended from the outset in 1989 to become a vortex of government and community life in this unincorporated area of the county. The master plan was approved under a format that sets limits on the total development of residences, shops, and offices. More than three decades into the project, the population has reached almost 34,000 of a planned 70,000-plus. About 14,000 residences of an entitled 31,000 and 3.8 million square feet of commercial of an entitled 7 million have been built.

The company provided land for county health facilities, county office buildings, and the school board. These projects were followed by land provided for the Veterans Affairs Outpatient Clinic, the Moore Justice Center, four elementary schools, a middle school, a high school, and a regional park. A second regional park is in its planning stages, according to Eva Rey, a Viera vice president.

This lifestyle community is not intended to provide workforce housing. House prices start well into the $300,000s and rise quickly toward $1 million. A one-bedroom apartment with 683 square feet is priced at over $1,600 a month, according to Viera's website. Market demand is high, Viera president Todd Pokrywa said during the roundtable discussion.

"We can't deliver a house for under $390,000," Pokrywa said before elaborating on the demand. "We are still running lotteries. In the past, we ran lotteries. Then we turned to the highest offer. Now we've returned to a lottery."

Middle-income housing

Brevard fits the profile of communities where middle-income households struggle to afford a residence and pay for utilities. The rule of thumb set by the US Department of Housing and Urban Development (HUD) is that no more than 30 percent of annual gross household income should go toward home ownership or rental.

A by-the-numbers look at the cost of shelter in the county was provided at the roundtable discussion by the Atlanta Fed and Dale Brill, chief policy officer for Habitat for Humanity of Greater Orlando and Osceola County. Both reports showed middle-income families are hard-pressed to purchase or rent a home.

Bostic mentioned the rule of supply and demand as a driver of price, and signs of unsatisfied demand for housing in Brevard are evident in an analysis of data from Redfin, a national real estate brokerage. Despite the recent rise in mortgage rates, Brevard residences sold in May at a faster rate and at a higher price per square foot, up by almost 54 percent, compared to January 2020, when the United States declared the COVID-19 public health emergency.

In the rental arena, the Atlanta Fed's Southeastern Rental Affordability Tracker for the Palm Bay metro region, which includes Brevard, shows a shortfall of 2,829 homes affordable to households earning at or below 80 percent of the area median income (AMI) of $79,407. While 80 percent of the region's AMI is $63,525, a teacher with 10 years' experience earns about $50,000 a year, according to a school spokesperson.

In his presentation, "Housing: A Business Concern," Brill focused on high and rising housing prices as a threat to the region's ability to attract companies and the jobs they bring. This stems from companies considering housing costs in decisions to open a facility because they will factor into the wage packages needed to hire and retain workers.

Rising housing costs should be a growing concern in Brevard's economic development, Brill contended. A $281,000 house, which he cited as a median-priced, entry-level dwelling, is unaffordable for 89 percent of one-income households in the health sector and 99 percent of one-income households in education and training.

Paycheck to paycheck

A growing number of county households are hanging onto their homes by their fingernails. Since the COVID-19 pandemic began disrupting the economy, the number of households in the area reaching out to Family Promise of Brevard for help to keep a roof over their heads has increased from 375 in 2020 to a projected 2,500 this year, according to Pagliarini, the nonprofit's executive director.

"A traditional, silo approach will never work again," Pagliarini said after the roundtable discussion. "It's too complex an issue. We can't solve it at the highest level. But we can change it at the community level. We can create stability so families aren't facing homelessness in the first place."

The organization has responded to the emerging set of challenges by expanding its three core services—shelter, stabilization, and prevention—and delivering the suite of services in a community center in one of the county's hard-pressed areas.

"The goal is to create a hub of services that helps a family stabilize and elevate their economic mobility in one location," Pagliarini said. "What's different now is that we have invited health care, childcare, and career navigators to colocate with our housing services so that they are across the hall instead of across the county. And at the core of the model is a large community classroom entirely focused on creating a talent pipeline from resident, to education, to employer."

The comprehensive scope of services intends to help households remain in their home. "We know it's way less traumatic, and more cost effective, to help families stay in housing, so 80 percent of our focus is on prevention and stabilization and 20 percent is on providing shelter," Pagliarini said.

Community support for this approach is evident in a facility Family Promise occupied in March. Services are delivered in a decommissioned fire station the City of Cocoa agreed to lease to the nonprofit for 20 years at a price of $1 a year. Named the Firehouse, the facility opened with zero debt following renovation funded by a federal grant and donated goods and services, Pagliarini said. The project provides lessons that Family Promise plans to put into practice as it develops its next community-based facility in another hard-pressed area.

"We have to think in creative and fearless ways if we want to create a quality of life for the people with us, and for us," Pagliarini said. "People said, 'They'll never give you a fire house.' Well, what if they did? 'They'll never give you money to refurbish it.' Well, what if they did? We have to decide: are we a community that's OK with families living in situations that are putting children at risk, or that might expose them to trauma or violence? We can't be afraid to solve and put answers out there."

David Pendered

Staff writer for Economy Matters