Population Growth Fuels Lake and Sumter Housing Market
Dr. Jerry Parrish, one of the state’s most respected economists, recently gave a presentation to a group of businesspeople in Leesburg which made it clear that while interest rates, inflation, and supply chain disruptions will have some effects on the Lake and Sumter County housing market and the economy, the real driver of the local economy and housing market is population growth. The numbers made this point clear, but it also shed light on the dilemma these areas put themselves in economically.
Dr. Parrish points out that communities can grow their economy in two ways - through job creation such as manufacturing, technology, or distribution, or they grow their local economy through population growth. The lack of job creation in Lake and Sumter coupled with the huge local population growth over the last decades, clearly show the local areas are reliant on population growth to sustain the economy.
Here is the dilemma that now exists in Lake and Sumter County. If local governments do as some residents suggest, slow or impeded growth, then they cut off their economic lifeline to pay for government services and infrastructure. Plus, there is no guarantee that population growth will slow because people with money from other areas are able to pay higher costs and this creates a local housing market which is unaffordable for most local workers.
To add to that dilemma, Dr. Parrish points out that in 2030, the population in the two-county area, over the age of 65, will be more than 40.2 percent. This will burden local governments because these residents become buyers of non-taxable services instead of taxable goods. Additionally, a large over-65 population creates more constraints on local government services and healthcare, plus there will be a need additional younger workers to provide services.
Complicating the issues in Central Florida is the fact that for the last 12 years, this area, along with the rest of the country, has underbuilt homes, and there is basically a housing shortage in America. This can be clearly illustrated by a comparison between the 2005 and 2022 populations and housing permits from the Orlando Metropolitan area, based on the United States Census. In 2005, the population of the Orlando metro was 1,331,000, and housing permits were 14.5 per every thousand people, and in 2022, the population is 2,038,000 and the housing permits are only 7.0 per thousand people. Therefore, the population is up a whopping 53.1 percent and the percentage of housing permits per thousand people is down 51.8 percent. This undoubtedly demonstrates the pace of building homes is woefully behind.
The final two pieces of data shared by Dr. Parrish clearly illustrate the impact of population growth on the two-county area. From 2010 to 2020, per the United States Census regarding population percentage growth in the state of Florida, Sumter County was third in the state at a growth rate of 38.9 percent and Lake County was fifth in the state at 29.3 percent. It is important to note that these growth rates took place during more difficult economic times immediately after the Great Recession.
The growth is not expected to stop any time soon. Per the Bureau of Economic and Business Research at the University of Florida, as they evaluate where the next 4 million residents coming to the state of Florida will live, they forecast Sumter County will be third in growth again at 37.7 percent and Lake County will be sixth in growth at 29.7 percent. But what happens if some states become less business friendly and retirement accelerates in the baby boom generation?
Here are some truisms about the Lake and Sumter County area that everyone needs to accept:
Based on pure population growth, when there is a downturn in the national economy, this area will probably see less impact. Population grown is less reliant on jobs.
You can’t stop the population growth, and efforts to limit it by increasing impact fees and development costs will only drive out the families needed to serve an aging population.
If you want to convert the local economy to a more jobs-based economy instead of population and housing-based economy, there must be a plan for workforce housing because companies will not relocate to areas where working people can’t afford to live. This is going to be very hard to pull off as population growth funds local government.
If local governments restrict housing through programs and zones, they need to be aware they are also restricting their own economic stream. In addition, if growth is stifled and the population were to stay stagnant while continuing to age, the tax revenues will plunge as buying goods switches to buying services. The local government budgets collapsed in 2009 through 2011 when the area slowed in growth.
Local government and housing officials may not like it, but they are trapped in the population growth cycle that can only be changed by adopting housing policies which encourage younger working families to the area in order to attract new industries as well. Currently, the demographics of Lake and Sumter counties indicate this is a retirement area and future demographics suggests no change, and in fact, an increase in age. Lake and Sumter Counties are wonderful places to retire and live, and maybe, instead of seeking to change the model, it’s time for local governments to accept the reality, the natural geography and lifestyle makes this area one of the premier retirement destinations in the world. Hey, that is not a bad thing.
Don Magruder is the CEO of Ro-Mac Lumber & Supply, Inc., and he is also the host of the “Around the House” Show which can be seen at AroundtheHouse.TV.