Florida Mortgage Costs, Housing Market, Gas Prices Affect Retailers’ Holiday Projections

Sunshine State retailers can expect a keep-your-fingers-crossed holiday shopping season in the upcoming months, experts predicted this week.

Due in large part to a sagging real estate market, analysts expect a modest 5 percent increase in holiday spending this year, compared with a 6 percent rise the year before. The University of Florida released a study Friday indicating most people plan to spend about the same as last year.

That assessment is seemingly at odds with still-affordable Florida mortgage costs, falling gas prices, rising stock prices and unemployment remaining comfortably low, particularly in Brevard County, where the jobless rate is 3.4 percent.

Retailers often count on sales in final months of the year to nudge them into profitability territory. That, in turn, affects their expansion and hiring plans, as well as the amount of sales-tax revenues that pour into county budgets. But UF’s survey results showed:

• 56 percent of people interviewed plan on spending the same as last year.
• 32 percent said they would spend less.
• 12 percent said would spend more.

A current rosy economic outlook in Florida is tempered by concerns about the housing market and the volatility of gas prices. Energy prices have been dropping considerably, but people still are concerned they could go up again. And, at a time when Florida home mortgage rates are still low, those with loans of the adjustable-rate variety are still getting pinched.

Monthly house payments will rise, leaving less disposable income.

Still, Scott Krugman, a spokesman with the National Retail Federation (NRF), predicts U.S. consumers will spend $457.4 billion this holiday, a 5 percent increase over last year. Holiday sales in 2005 were $435.6 billion, a 6.1 percent increase from the 2004.

“We had a very strong season last year, which leads to tough comparisons,” Krugman said.

Some shoppers are more optimistic than others about the state’s economic future, and that’s reflected in how much they plan to spend at stores. Lenita Kelly of West Melbourne, Fla., said she is upbeat about the economy. Her plans are to spend more on her two children this year than last year.

“The job market is better now,” Kelly said.

Carmen Cruz of Palm Bay will spend less.

“I’m retired, and I don’t have as much money as I did before,” Cruz said.

BOTTOM LINE: If you’re currently making payments on one or more exotic Florida home loans, consider refinancing to a fixed-rate mortgage. That way, even as energy prices and other living costs fluctuate, at least you will be able to count on consistent housing payments!