“There’s not a whole lot of inventory on the market, and it seems to me it has been that way since the hurricane.”
The trick to successfully renting a home or apartment in North Okaloosa County involves showing up with a deposit in hand and filling out an application before ever visiting the actual property.
“Otherwise before you get back it’s rented,” said Brett House, a broker for Re/Max in Crestview.
Such is the state of the rental housing market, not only in Crestview but across the region. Demand had gotten far ahead of supply long before Hurricane Michael hit last October and thousands who were displaced by that catastrophic storm have ventured west seeking shelter.
“There’s not a whole lot of inventory on the market and it seems to me it has been that way since the hurricane,” said Eagle Realty broker Matthew Southard, who also works north of Eglin Air Force Base.
The long-term rental market across the region no doubt took a hit following Hurricane Michael, said Carmela Bell, the director of sales for Resort Quest Real Estate, but demand in that sector has significantly exceeded supply for at least 10 years.
Much of the disparity was created about a decade ago when the so-called housing bubble burst. With it came thousands of Northwest Florida foreclosures and short sales.
In November 2009, the Northwest Florida Daily News reported a record 2,205 foreclosures for the year in Okaloosa County and record totals in Walton and Santa Rosa counties as well. Between 2005 and 2009, it was reported, the number of foreclosures in Okaloosa had increased 793%, Santa Rosa 502% and Walton 1,122%
Many of those who lost their homes were forced to become renters, Bell said, and some portion of those remain hesitant or unable to buy a house today.
"We’re seeing now that a townhouse can be purchased with low mortgage rates for less than what people are making rental payments for,” said Bob Hudgins, a co-owner of Coastal Properties in Okaloosa County. “Some people, though, may have trouble qualifying. A lot of customers come in who can qualify for rental but not meet the more stringent requirements to obtain a mortgage.”
Another, quieter squeeze on the market is put on by people relocating to this region knowing that the Northwest Florida home they are having built will take a year or more to construct, said Alan Baggett, the executive vice president of the Building Association of Okaloosa-Walton Counties.
“That’s another pressure nobody thought about, but I see it,” he said.
Northwest Florida’s heavy reliance on the military and tourism for its economic well-being also create unique pressures that have impacted the long-term rental market.
A lot of people in beach communities take advantage of their location to rent to vacationers, and can profit handsomely from doing so. The long-term rentals that are available are swallowed up by people who can afford the premium prices charged by landlords able to market the proximity of water.
Renters in Destin and other areas on waterways, including parts of Niceville and Bluewater Bay, can expect to pay 10% to 15% more than areas extending west from Fort Walton Beach as far as Navarre, Hudgins said. That’s on top of rent prices that have now exceeded by 25% to 30% what they were during the housing boom that preceded the 2008-09 fall.
Affordable rental housing is all but non-existent in much of South Walton County. And Freeport, on the north side of Choctawhatchee Bay, is quickly becoming too expensive for most average wager earners, said Bill Imfeld, the county’s Economic Development Alliance head.
“There’s a continual uptick in rentals being charged,” he said.
The affordability imbalance is one that is familiar in Florida’s tourist-driven economy, according to Anne Ray, the Florida Housing Data Clearinghouse Manager for the University of Florida’s Shimberg Center. And it has created an economic conundrum for many communities.
“One phenomenon seen in resort areas is that there are relatively low-paying service jobs in an area whose popularity tends to drive up rental costs. There are a lot of areas where there is a shortage of affordable housing with rents that lower-wage workers can afford,” Ray said.
Prior to last October, the Panama City-area “had a relatively large rental housing community” for its size, according to Ray, but when Michael hit most of those accommodations were blown off the map. FEMA inspections found moderate to major damage to 9,188 housing units in Bay County alone.
The shortage allowed those whose holdings survived the storm to charge premium prices to rent them. Zillow reported that median rent in the Panama City metropolitan area was $1,457 in March 2019, a 13.4% increase over the previous year.
No other metropolitan area in the state experienced a double-digit percentage increase, according to Zillow.
Consequently, affordable housing has become so scarce and expensive in Bay County that it is impacting hurricane cleanup efforts. Employers can’t hire enough employees to work construction jobs or even to man fast food restaurant positions.
While the Crestview area has traditionally been relied upon as an Okaloosa County sanctuary for more affordable rental housing and continues to experience rapid growth, the military presence there, which includes the 7th Special Forces Group and Duke Field, has contributed to the shortage of available long-term rental units.
“When you look at the available housing product here in Okaloosa County, we have a shortage; it’s readily apparent to anyone who looks at it,” said Nathan Sparks, the executive director of the Okaloosa County Economic Development Council. “It’s hard for us to accommodate new missions or expanded missions without solving the housing riddle.”
Military housing stipends have likely contributed to landlords charging higher rent, experts say, and the sheer size of the Eglin Air Force Base reservation has created challenges for would-be developers.
“The land surface area to build on is compressed and limited by the sheer expanse of the reservation,” Sparks said.
The DeFuniak Springs area has become the refuge for middle class and lower-income renters in Walton County. Tom Baker, executive director of the Walton County Housing Authority, said there are 300 people participating in the county’s housing voucher program, and “the vast majority are in the DeFuniak Springs area.”
“There’s a dire shortage of any type rental property here that fits into the category of work force and low income,” he said.
Baker said he hands out 100 housing vouchers and assures those to whom they are provided that if they can find a rental unit government assistance will be afforded to them. Still, nearly all of the vouchers go unused.
This year an apartment complex is being built on Orange Avenue in DeFuniak Springs, whose owners have assured Baker some of the 50 units will be dedicated to subsidized housing.
The additional housing units will help, but Baker acknowledged one complex isn’t going to solve the long-term rental crisis in Walton County.
Imfeld, like Sparks, is confident private sector developers have taken note of the dearth of long-term rental opportunities and are moving even now to meet the established need.
“The fact of the matter is, if there is an opportunity that’s bankable, as long as the private sector has the opportunity to understand it, they’re going to act on it,” he said.
There is a lot of potential for development along the U.S. Highway 331 corridor in Walton County, which was recently expanded to four lanes from South Walton to DeFuniak Springs. Imfeld said he wants to ensure “that some portion of that housing is attainable” so that not only can millionaires find homes to purchase, but also firefighters, teachers and those further down the income scale.
But Baker, Walton County’s housing authority director, said he has not seen the kind of private-sector interest in providing low to middle-income range housing as he would expect in a market so needing it.
“You’d expect demand is such (that) the free market would come in and make a profit from the situation,” he said. “But there’s just a lot of things that keep it from working out on its own. There’s not a lot of attainable, affordable type housing being built up here.”