Calculating Housing Demand

IV. HOUSING DEMAND ANALYSIS

The Affordable Housing Needs Assessment provides a current socio-economic perspective on affordable housing demand conditions in Palm Beach County and its major municipalities. The factors that contribute to housing demand include growth and change in the local labor market and industrial base, migration patterns, housing values, household income, household composition and housing type preference.

The level of affordable housing demand is largely determined by job growth and retention. The affordability component of housing demand, however, is based on local wages and salaries that are then translated into household incomes. This level of analysis takes on added importance in the post-COVID economy where massive job loss has reduced or eliminated worker household incomes. Affordable housing demand will be significantly shaped by the economic impacts of COVID. Prolonged job loss and diminished household income will certainly lead to severe housing distress conditions including evictions, foreclosures, and homelessness.

Calculating Housing Demand

Employment and Housing Demand

Housing affordability in Palm Beach County cuts across a wide range of households. The three clearest measures of county-wide affordability are 1) the proportion and growth of cost-burdened households, especially “severely” cost-burdened renter households; 2) the financial gap between the price of affordable housing at different income levels, and 3) new construction price trends for owner and renter housing in Palm Beach County and its municipalities.

The previous occupational analysis clearly shows the economy of Palm Beach County is mainly comprised of lower-wage, service sector employment. While service-providing industries and occupations are essential to Palm Beach County’s tourism-based economy and do offer livable wages among many of the associated occupations, the vast preponderance of employment is found in low-wage earning occupations. The annual wage level translates to worker households with median incomes generally below the median income for Palm Beach County.

Housing Affordability and Cost Burden

The dynamics driving Palm Beach County’s housing affordability issues are a combination of factors that include 1) the inventory and development of housing unit stock over time, 2) demand factors including population growth, household lifestyle preferences, local as well as non-regional housing purchasers and renters, and 3) economic dynamics, including job creation, occupational structure, and household earnings and income.

The significant growth of severely cost-burdened renters is the most pressing problem due to three market conditions: 1) the increasing demand for renter housing throughout Palm