The Next 10 Years
How retirees and the young will shape our future.
-By Kim Hackett
Florida is rebounding from the recession better than most states. Here in Sarasota and Manatee, housing starts and home prices are up and contractors are back to shouting that they can’t find enough workers to meet the surge of demand for new homes.
But what about the long term? We chatted with Christopher McCarty, director of the University of Florida’s Bureau of Economic and Business Research, to find out which population trends will affect the state and region over next 10 years.
Embrace the Over-55 Set
Florida’s population will increase slowly, about one percent per year, for the next several years, before picking up steam. But despite anecdotal evidence that younger people are moving to Southwest Florida to start their careers and live downtown, they will be far outnumbered by the baby boomers moving here to retire. Employment trends show the percentage of the working population declining from 41.5 percent in 2000 to 36 percent by 2030 in Florida.
That’s not about to change. About 55.2 percent of the population growth will come from people 60 and older, according to Census estimates.
“Florida has not been the best state in terms of higher education, creating the kinds of jobs that go with advanced degrees,” McCarty says. “We lose a lot of [young] people because of that.”
Boomers may be more active than their parents as they age, but at some point they are no longer going to be working, and they are going to demand a lot of services. “It has implications not just for Florida, but for the entire country and world when you have fewer workers supporting more non-workers,” says McCarty. “People who move to Florida have resources, but they won’t be contributing to Social Security.”
Florida’s business model of tourism and housing, largely fueled by retirees, will remain. “There’s no getting around the retiree market,” McCarty says. “The governor and legislature are trying to diversify, but it can’t be done quickly. You can’t get away from an 80-year-old business model. We’re all going to be dependent on that model for quite some time.”
Tension between the Generations
As Southwest Florida (and much of the world) ages, the young will carry a heavier burden, and that could cause tension between the generations. Older people will need more support and services, and young people will have to help finance some of that. Yet they will be earning less than the generations before them. “There is definitely a rift,” says McCarty. “If you look at the numbers, because of the recession, millennials are taking a hit. It will take them longer to get to the median income than previous generations.” The decline in consumer confidence in Florida has been among younger households with lower incomes. “This group reports not only lower current personal finances compared to a year ago, but has expectations of dramatically lower personal finances a year from now,” he says. If the trend of higher unemployment and lower salaries throughout young people’s lifetimes continues, economic growth will slow and the impact on the social safety net could be enormous.
Housing: Good, not Great
The median price of a house is up 15 percent (16.2 percent in Sarasota and 14.6 percent in Manatee) since last year, but don’t expect that big increase to continue. “If you graph out median price prior to and after the recession and look at what the trend line would have been, minus 2004-2006, we are close to that [historic] trend. There is a lot of over-expectation in the housing market, and people are overly confident about it lifting the economy,” McCarty says. Interest rates are destined to go up, and this will again affect younger people, who may be shocked since they have no experience with interest rates higher than five percent. This event, and the stricter requirements to obtain financing, are making it more difficult for younger people to become home owners. “The housing recovery is a two-edged sword,” says McCarty. “The people who own and lost the value in their homes during the recession have recovered a lot of it, but that’s also priced [new] people out of the market.”
Small will be Big
Typically people downsize as they age, so expect the trend toward smaller homes to continue. It’s taking baby boomers a little longer to retire since their home values, stock portfolios and 401(k)s took a hit during the recession, but eventually, says McCarty, these people will sell their homes. “This can’t go on forever,” he says. “And they usually leave the 2,000-3,000-square-foot home with the yard, so at some point this large set of baby boomers will have existing homes that will be for sale,” McCarty says.
It’s not clear who’s going to buy them. “I think we’re going to have a very, very large supply of existing large homes,” he adds. On the other hand, McCarty says it could be a good opportunity for younger people to get into a big home at a big discount.
And where will these baby boomers go once they downsize? Just like a lot of young people, they’re abandoning the suburbs for the cities, especially around hospitals. “Around Gainesville, we’re seeing a lot of building around hospitals because that’s where the services are,” he says.
Here's What I See
“Sports and rowing are going to have a significant impact. The 2017 World Rowing Championship will be the largest international event in the state and televised worldwide. We are bringing in people from 80 countries. Along with IMG’s expansion and Premier Sports, a 140-acre multi-sports campus in Lakewood Ranch, the stage is set for attracting folks to our universities and creating jobs in sports medicine and training. We’re partnering with Sarasota County IMG and other organizations to attract more sporting events to the region.”
“Hispanics from the other coast are moving [here] because of affordability. We have people from 20 different countries in the Latin Chamber. The Hispanic population has had a 23 percent growth rate over the last decade. They will have huge political impact. Hispanics will vote for candidates concerned about family issues—jobs, the economy and how they treat the undocumented. A lot of people who are legal residents have friends and family who are not.”
“We will have a strong boomer market for the next 10 years. We are selling seven retirement homes for every one we sell to a professional family. The proportion has never been so unbalanced. The homes will have more conveniences, more connections to the outside, more open living and more electronics. There will be more multiuse rooms, less formality—fewer formal dining rooms, for example. We are seeing less golf and an emphasis on fitness; all our new communities have an exercise room. “
“Our economic driver is not going to be job growth, it is going to be increased population and folks bringing their money down here. There is going to be an additional need for service workers, and those jobs do not support the cost of housing. We will continue to see a growing division between the haves and have-nots. We also will see more renters. In 2006, about 30 percent of folks in Florida were renters; now it is 38 percent. People who lost their house to foreclosure can’t buy again for five years. There is going to be a high demand for apartments and townhouses and less home ownership.”