Population growth fuels Lake and Sumter housing markets

Dr. Jerry Parrish, one of the state’s most respected economists, recently gave a presentation to a group of businessmen in Leesburg who made it clear that if interest rates, inflation and Supply chain disruptions will impact the Lake and Sumter County housing market and economy, the real driver of the local economy and housing market is population growth.

The figures clarified this point, but they also shed light on the dilemma these regions have placed themselves in economically.

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Dr. Parrish points out that communities can grow their economy in two ways: through the creation of jobs 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 tremendous growth in the local population over the past few decades, makes it clear that local areas depend on population growth to sustain the economy.

This is the dilemma that now exists in Lake and Sumter County. If local governments do as some residents suggest, slow or impede growth, they are cutting off their economic lifeline to pay for government services and infrastructure. Additionally, there is no guarantee that population growth will slow as people with money from other areas are able to afford higher costs, creating a local housing market that is unaffordable for most local workers.

To add to this dilemma, Dr. Parrish points out that in 2030, the population of the two counties region, over the age of 65, will be over 40.2%. This will burden local governments as these residents will become purchasers of non-taxable services instead of taxable goods. Additionally, a large population over the age of 65 creates more strains on local government services and health care, and there will be an additional need for younger workers to provide services.

Complicating the problems in Central Florida is the fact that for the past 12 years this area, along with the rest of the country, has underbuilt homes, and there is essentially a shortage housing in America. This can be clearly illustrated by a comparison between the 2005 and 2022 populations and housing permits of the Orlando metropolitan area, based on the United States Census.

In 2005 the population of Metro Orlando was 1,331,000 and housing permits were 14.5 per thousand people, and in 2022 the population is 2,038,000 and housing permits are only 7 .0 per thousand people. Consequently, the population increased by 53.1%, and the percentage of housing permits per thousand people decreased by 51.8%. This undoubtedly demonstrates that the pace of house construction is terribly behind.

The last two pieces of data shared by Dr. Parrish clearly illustrate the impact of population growth on the two county region. From 2010 to 2020, according to the United States Census regarding the percentage growth of population in the state of Florida, Sumter County was third in the state with a growth rate of 38.9% and the county de Lake was fifth in the state with 29.3%. It is important to note that these growth rates took place during tougher economic times immediately following the Great Recession.

The growth is not expected to stop anytime soon. According to the University of Florida’s Bureau of Economics and Business Research, as they assess where Florida’s next 4 million people will live, they predict Sumter County will again be the third largest in growth at 37.7 percent and Lake County will be sixth in growth at 29.7 percent. But what if some states become less business-friendly and retirements accelerate among baby boomers?

Here are a few truisms about the Lake District and Sumter County that everyone should accept:

  • Based on pure population growth, when there is a downturn in the national economy, this area will likely see less of an impact. The educated population is less dependent on employment.
  • You can’t stop 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 one that is more employment-based instead of population-based and housing-based, there has to be a plan for labor housing, because the businesses will not move to areas where workers cannot afford to live. This is going to be very difficult to achieve because population growth funds local government.
  • If local governments restrict housing through programs and zones, they should be aware that they are also restricting their own economic flow. Moreover, if growth is stifled and the population stagnates while continuing to age, tax revenues will fall as the purchase of goods shifts to the purchase of services. Local government budgets collapsed from 2009 to 2011 when the region slowed its growth.

Local authorities and housing officials may not like it, but they are trapped in the cycle of population growth that can only be changed by adopting housing policies that encourage young working families in the area to also attract new industries.

Currently, demographics for Lake and Sumter counties indicate this is a retirement area and future demographics suggest no change, and in fact, an increase in age. Lake and Sumter counties are wonderful places to retire and live, and perhaps instead of looking to change the model, it’s time for local governments to accept reality, the natural geography and the lifestyle make this region one of the world’s premier retirement destinations. . Hey, that’s not a bad thing.

Don Magruder is the CEO of Ro-Mac Lumber & Supply, Inc., and he is also the host of the show “Around the House” which can be seen on AroundtheHouse.TV.