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More Southwest Floridians are living "house poor"

More Southwest Floridians are living "house poor"
Posted at 10:22 AM, May 05, 2021
and last updated 2021-05-06 14:34:57-04

LEE COUNTY, Fla. — Kiara Babb takes pride in being a provider for her four children, so they can focus on just being kids.

"When I was younger, we worked. Like - we knew we needed to help out. I didn’t want that for my kids," said Babb.

Keeping a roof over their heads was always a priority, but it meant working long hours just to barely make ends meet.

"Having financial issues tire you out - mentally, emotionally, physically," said Babb. "I’ve gone through depression before. I’ve been evicted before."

78 percent of American workers are like Babb - living paycheck to paycheck, according to data from Career Builder. Babb says for majority of her adult life, most of her money went towards rent, not including other expenses.

"It was probably about 70 percent of my income," said Babb.

That’s the opposite of what most financial planners would advise. Financial adviser Victoria Graham tells her clients to aim even lower.

“I would say 15 percent. A lot of people say 25, but with this market, and the way incomes are fluctuating, and everything that’s going on, I would say 15 percent,” said Graham.

She adds that’s because the average adult have so many other things to consider.

“That doesn’t take into account your taxes you have to pay. The food you have to put on the table. If there’s any repairs that have to be done. If something happens with the children. There’s just so many things to consider,” said Graham.

But even the higher end of graham’s suggested goal, 25 percent of income on housing is out of reach for most people living in Lee County, like Babb.

Between 2015 and 2019, the median household income in Lee County was about $57,000, according to the U.S. Census. The latest data from the Economic Policy Institute shows during that same time frame, the annual cost of living for a family of two adults and two children in Lee County came to more than $70,000 a year. That means most are coming up short by about $20,000, or going without certain expenses.

So, for most Americans, Graham’s goal isn’t just out of reach. It’s nearly impossible.

“It is very difficult to be able to spend that amount of money from your income and have decent housing, and that’s not just in purchasing. That’s in rentals, also,” said Graham.

The average cost of a Lee County home jumped from $367,000 in March 2020 to $482,000 this March, according to the Florida Gulf Coast Multiple Listing Service. That’s leading renters and homeowners to take a less traditional route to housing.

Becky Lucas works with the nonprofit Habitat for Humanity, which helps families build homes they can afford. She says she’s seen an increase in applicants for habitat homes within the last year.

“Families who are renting homes are now being displaced, because the owners of those homes are now selling those to capitalize on the high appraisal values in the area,” said Lucas.

Babb was one of those renters. She said last year the owner of the home she was renting gave her an alternative. Either buy it or pay a rent increase.

“Normally, my raise would equal the amount that rent would go up,” said Babb.

But, because of the pandemic, she didn’t get that pay raise. Feeling at the end of her rope, she also turned to Habitat for Humanity. Lucas says their program is designed to bring families closer to achieving a more sustainable life.

“The mortgage payments are based on 30 percent of their income. So, they will always be affordable,” said Lucas.

Florida Gulf Coast University Finance professor Tom Smythe sees a silver lining coming out of the pandemic, for other families like Babb.

“One of the benefits of the pandemic is that we have seen people changing their spending habits,” said Smythe.

Stats from Federal Reserve Economic Data shows most Americans made history with their savings this past year. To put that in context, Americans typically saved around 10 percent of their annual income dating as far back as 1960. That dropped to as low as two percent in July 2005. That number jumped to 33 percent in April 2020, early on in the pandemic. Even at the beginning of this year, workers reported saving 13 percent of their income.

“The question is will it continue when we fully recover from the pandemic?” asked Smythe.

Saving sounds like the best solution to financial problems, but it isn’t that simple for families like Babb’s. Smythe says that’s where safety nets like Habitat for Humanity come into play.

Lucas says Habitat for Humanity has built 1,678 homes in Lee and Hendry Counties. Babb and her children moved into their habitat home a little more than a month ago.

“It’s more than providing stability. It’s more than providing comfort. Like, it’s a lot of hope,” she said.

Smythe also shared free resources people can use for money management. He says local banks like Sun Trust offer budgeting programs. Many places of worship also provide financial guidance.

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