Most Miamians struggle to afford housing. What can be done about it?

Annie Lord is the executive director of Miami Homes for All, a Miami-based nonprofit that focuses on housing affordability.

Miami’s hot. Its real estate market’s even hotter.

Nearly 60% of greater Miami renters are cost-burdened, a term for people who spend at least 30% of their monthly income on housing. Roughly three in 10 renters are “severely cost-burdened,” meaning they spend at least half of their income on housing.

What can be done to help? To find out, the Miami Herald sat down with Annie Lord, executive director of Miami Homes for All, a Miami-based nonprofit that focuses on housing affordability.

The organization celebrates its 40th anniversary this year, so the Herald met with Lord to discuss housing affordability in South Florida and what’s being done — or not — to improve it.

Below is an edited version of a 40-minute interview with Lord. It touches on why housing is so expensive for Miamians, to what degree state and local affordability initiatives have helped, and what measures governments can take to make housing more accessible. The Herald encourages readers to listen to the full interview here:

How has the state of housing in Miami-Dade changed since your organization’s founding 40 years ago?

In 1985 and into the 1990s, Miami was in the midst of a significant crisis of unsheltered homelessness, driven by economic shocks and immigration shocks. We had 8,000 people that were unsheltered. At that time, the community really began to come together and think through a major investment [the Food and Beverage Tax] to address this problem. So I guess what’s changed is a broader acceptance of this idea that we need more affordable housing, not only to prevent homelessness, but to continue to support the economy of Miami and the culture of Miami.

How have things changed since the pandemic? Lots of high-income out-of-staters moved down, but what else has driven up housing costs?

Wages are stagnant. Meanwhile, real estate prices have gone up. What’s driving that? Certainly foreign investment and institutional investment, and the price to develop. It costs a lot more to develop new housing and to even to rehab [existing housing]. The cost of construction materials, the cost of capital is up. Five years ago, we had 3% and 4% interest rates on capital. Now we’re in the 7% or 8% range.

What else?

Property insurance, for sure. In Florida, we had the exit of a lot of property insurance companies. There’s been some intervention, perhaps that’s helped to recruit the property insurance companies back, but we’re still seeing really high [insurance] prices. And the other thing is, we’ve artificially constrained supply as a matter of policy.

What do you mean?

For decades, we’ve zoned much of the county as single-family. It’s really challenging to build anything bigger. Especially in a single-family neighborhood, you’re going to get fought. It’s the classic NIMBYism [”not in my backyard”] thing — neighbors and neighborhoods have fought to keep single-family zoning because they’re afraid of what it will mean for them if that changes.

I appreciate that we have policymakers and decision makers pushing to increase density and allowed height. It’s not a simple conversation, but it is one we must have, because one of the main questions we have to ask in terms of increasing housing, especially what’s affordable, is where are we going to put it?

Lawmakers have tried to answer that question. At the state level, their response was Live Local, a 2023 state law that aims to facilitate and incentivize affordable housing development. What’re your thoughts on Live Local?

Live Local intends to incentivize [the building of] middle-class housing. The incentives are tied to a housing requirement, meaning you can build more units, you can build higher, if you have a certain percentage of the residential units go to middle-income people. And it provides some tax breaks as well. I appreciate its intention.

But what it does not do is incentivize deeper affordability, which is what we desperately need. It’s not that we don’t also need more middle-class housing. There is a shortage there. In Miami-Dade, we have a shortage of about 17,000 units for middle-income people. But once you go down an income bracket, and you look at all the people earning up to about $75,000 per year per household, we’re missing 90,000 units in Miami-Dade.

Live Local prioritizes housing for those making between 80% and 120% of area median income. In Miami-Dade, that’s $86,000 to $105,000. Your issue with it is that it doesn’t incentivize building housing that’s affordable for people who make less than that. How might we encourage building housing that’s affordable for households making less than $86,000?

Why not tier the incentives to achieve some deeper affordability? That would look like having 10% of the units go toward the lowest income bracket, say, up to 50% of the area median income, and then another 10% up to 60% of the area median income, and then another percentage up to 80% of the area median income, and then a percentage up to 120%. That’s a very common practice around the country.

Miami-Dade County passed a zoning ordinance to promote affordable housing around transit stops a few years ago. The city of Miami did the same this year. How do you judge those initiatives?

So, about the Rapid Transit Zones [the county ordinance], and I should also say this about Live Local, too — if you can streamline the permitting and zoning process so that you don’t get stopped at every turn by a small minority of neighborhood voices, that’s really important. And this is coming from a person who is pro community-based solutions. But the power dynamic was really off. And so I appreciate that [the county’s ordinance] seeks to streamline that decision making.

For affordability, it provides for a 12.5% housing requirement. So 12.5% of any new development units need to be affordable, meaning [for someone earning] up to 120% of the area median income.

Is it fair to assume that developers will typically charge as much as they can?

Yeah, they’ll charge whatever the market will bear.

I would like to see what kinds of affordability levels a classic [development] deal could support. And then let’s ask for that. Around the country, standards are typically higher than 12.5%. Think up to 20%, which is what the city of Miami’s [new ordinance] requires.

I want to be respectful of development finance and the realities of it. We’re going to have to see if the affordability levels that the city of Miami put in will support development or constrain development. I like [the city of Miami’s new ordinance] better because it does tiering, and I appreciated that the city’s first instinct was to go toward deeper affordability, and I think that’s what we should all be striving for.

What arguments do you make to policymakers when encouraging them to account for deeper affordability in new zoning initiatives?

The “why” is always the most important. Who are we talking about, and why does it matter? We’re talking about childcare workers, preschool teachers. We’re talking about elder-care workers. We’re talking about home health aides, medical assistants, construction workers, almost everyone in the tourism sector. These are the industries that, not only today, but in the future, will drive our economy.

Many of the people who are earning lower wages are the creators of the culture that makes Miami globally unique. One of the things that people love the most about Miami is our culture. And if our home prices and our rents are so high that those people cannot afford to live here, then what distinguishes us from Jupiter Beach or Stuart or Naples? I think we’ve got to remember who we are and why that makes us special on a global scale.

Speaking of identity, in all of these ordinances and pieces of legislation, there seems to be a narrative tension between increasing the housing stock and protecting the character of communities. How do you navigate those concerns with residents who are worried about seeing their neighborhoods change?

I have a lot of respect for neighbors who are afraid of big changes. What I have found to be resonant with people is to ask them to challenge their fears a little bit. To question whether there is evidence to support their fears. Some might be afraid of their property values and taxes going up so that they can no longer afford the place. And some might be afraid of their property values going down, or that their neighborhood will be rampant with crime. There’s not a lot of data to support either fear — that property values will go up or down due to a single, or even a few, affordable developments in a neighborhood, or that crime materially increases, that parking materially decreases, that traffic materially increases. These are not things that are proven absolutely by the data.

And, human to human, perhaps we all need to be thinking a little bit more about how we connect to each other. It sounds Kumbaya, but everyone can agree that we want a life that is connected to other people, that we want to feel part of a community, and that we want to be understood by that community. I’m eager to look for ways for us to consider that, and sometimes that means getting to know people who are really different from us, even people that we’re worried are so different from us that it’s going to cause problems.

And so if there’s going to be a building that’s coming to your neighborhood, and it might have people who earn less than your family or your neighbors, maybe think about how you’re connected to those people.

What about developments that draw people who earn more money than the people living in the surrounding neighborhood? Is that where the affordability requirements come in?

That’s right. We don’t want a distorted community where it’s all or nothing. What we want is a mixed community. If what we’re incentivizing and building and making space for is only for certain people and not for others, especially others who are currently living in that space, then we’ve got to change.

To make these developments happen, governments in Florida have leaned heavily on tax breaks. Is that enough to incentivize construction of the amount of affordable housing Miami-Dade needs?

There’s just no replacing public investment. There’s no amount of tax break that will make an affordable deal work without subsidy. And it makes people uncomfortable. I understand that. It is not a principle shared by every person, and I respect that.

But when we consider the things that we want and the things that we value — a healthy future economy and a culture that’s symbiotic with that economy — then we are going to have to invest in it. That stuff doesn’t happen for free. That’s a tough pill to swallow for many people. But I think the longer we wait to swallow that pill, the more expensive it gets.

Just two years ago, we did an analysis of the existing affordable housing pipeline of deals. Two years ago in Miami-Dade, we had 14,000 units in the pipeline. They could be built, but for $1.5 billion of investment.

We re-did that analysis this year. Two years later, we’ve got less than 10,000 units in that pipeline, and they require $1.7 billion. So we’re getting less for more money. And that’s just two years later, so we really have to step up.

How do we pay for that?

There’s nothing to replace the public sector. Because there’s nothing that can do it at that scale easily. I chose the word “easily” on purpose. Communities around the country, like Broward and Palm Beach counties, have been passing general obligation bonds for decades to support major infrastructure initiatives. Affordable housing is infrastructure. There is wealth to pay for that. [Miami-Dade] has also gone 21 years since its last general obligation bond, so there’s bonding capacity.

Now, I know we’re not in a great economic moment. This is not the moment to ask the taxpayers to shoulder this burden. But that time will come around again, and we want to be ready. These things don’t happen overnight. You’ve got to plan for it. You have to understand what the investment would pay for, and then you have to educate people about it so they can vote on it in an informed way.

In the next handful of years, this is something we should be looking for at the right time, when it will not overly burden the taxpayer. We sort of missed an opportunity last year. This has to be a conversation that we start to confront.

Speaking of how we pay for things — property taxes are big generators of government revenue. There are proposals at the state level to eliminate property taxes. What do you make of those proposals and their effect on local governments’ ability to fund affordable housing initiatives?

If we value affordable housing because we need it to support our workforce and our elders and our kids, then there has to be a way to finance it. And if we are going to invest and pass laws that provide tax incentives, well, you need to have some property taxes in order for those incentives to work. So that would be removing a tool from the toolbox for [promoting housing] affordability. It would certainly have a negative impact.

Thank you so much, Annie.

This story was produced with financial support from supporters including The Green Family Foundation Trust and Ken O’Keefe, in partnership with Journalism Funding Partners. The Miami Herald maintains full editorial control of this work.