Fla. Consumer Confidence Hits 6-Month High

Low unemployment and a rising stock market have raised the confidence of Florida consumers to a six-month high in January, according to the Gainesville Sun. That’s good news, but some economists are warning that a decline is imminent as the red-hot housing market begins to cool off.

The consumer confidence meter for jumped to 95 in January among Florida residents, up from 91 in December. This estimate was the conclusion of a survey done by the University of Florida’s Bureau of Economic and Business Research. It uses a scale between 2 and 150. The highest recorded consumer confidence in the state was 112 in early 2000, right about when the stock market peaked.

“Ninety-five is, historically, a relatively high number,” survey director Chris McCarty said. “Homeowners that were expecting quick turnover in their property will no doubt be forced to hold on to it longer. This slowdown in housing will have an effect on other areas of the economy, such as sales of furniture, appliances and home improvement stores.”

Unemployment was at 3.3 percent statewide in December. Energy prices are expected to jump once again, and Florida mortgage rates aren’t likely to compare to the low levels of the past several years, as the Federal Reserve keeps bumping them higher. All of this will put pressure on housing prices that are currently over value, according to the survey.

In fact, McCarty predicts that by the end of the year, housing prices will even dip in some markets, affecting the ability of a large number of owners to extract home equity. Is Florida headed for a difficult economic period? Doubtful. While pricier Florida home loans will cause housing prices to stabilize, the state’s real estate boom is widespread and demand will remain high enough to stave off any severe market correction.