Slow Down in Miami Housing Market Affects Consumer Confidence

As the Miami housing market slows down and demand for Florida mortgage loans remains low in the area, developers have been forced to re-evaluate their plans. This isn’t necessarily a bad thing. But the effect of the situation on consumers in the city is a bit worse.

According to survey data from the University of Florida, the gap between consumer perceptions in Miami-Dade County versus the rest of the state is getting wider, with local residents increasingly feeling more negative about their personal financial situations. They aren’t applying for Florida mortgage loans of any kind, they aren’t confident about selling their homes and they fear for the future.

Consumer confidence hits a snag

For the first six months of this year, Miami-Dade consumer confidence took a sharp drop compared to the rest of the state. On an index of 100, Miami-Dade measured 76 compared to Florida’s overall 86. Last year Miami-Dade was 83, just three points behind the rest of the state.

Survey research director Chris McCarty attributes the Miami negativity to a combination of a slowing housing market and rising gas prices.

”Miami is poised to take it on the chin from the real estate market,” said McCarty, who notes that for many consumers, especially in South Florida, real estate had been a big source of wealth. That’s more difficult now with lenders tighter refinancing requirements. Others with adjustable rate Florida mortgages are feeling the rise in interest rates.

”People always depended on the fact, you could always sell your house,” he said. “But even here in Gainesville, houses are sitting much longer.”

Unlike Miami-Dade, respondents in Broward County have similar perceptions as the rest of the state, McCarty said, although the sample size for Broward is smaller than in Miami-Dade. In that region, at least work is being done on affordable housing, an attempt to satisfy lower-income buyers seeking a Florida mortgage loan.

McCarty doesn’t see local or statewide confidence improving for a while.

”The effects are probably going to linger through the remainder of this year and probably the beginning of next year,” he said, as the real estate market continues to cool off. “A lot of people think we’ve only begun to experience the effects in Florida.”

Across the country, real estate is no longer driving the economy. It’s unclear what this will mean for consumer, but home sales are STILL expected to be the third highest ever on record. It may be too early to panic.