Housing Affordabilty in Tampa Bay Housing Market to Remain Key Issue

Despite a stock market that recorded 22 record highs in 2006, a sluggish Florida housing market could keep a drag on the local economy for much of 2007.

That’s some of the outlook of Joseph T. Keating, chief investment officer at First American Bank, lead bank of Alabama Bancorp. Keating, a regular contributor to CNBC’s Squawk on the Street, was the featured speaker Tuesday at the Tampa Bay Business Journal’s monthly “Power Breakfast” series.

A year ago, the biggest question mark regarding the economy was Florida mortgage interest rates and the Federal Reserve’s monetary policy, he said. But by mid-July of 2006, it appeared the rate hikes were over, and while keeping the “door open” for more rate hikes, the Fed appeared finished with rate hikes for the short term.

Common stock prices advanced 10.3 to 16.8 percent in 2006, largely on the back of the sharp move higher since the recent low on July 17, Keating wrote in an investment analysis online in December.
The key for 2007 is the housing market.

“The question remains how far will the slowdown in the housing market spread?” he asked

While other prognosticators have made brighter forecasts for the housing market in the near term, Keating believes affordable housing in Florida and pricing is going to be a drag on the economy.

“I don’t buy it,” Keating said referring to talk of a quick housing rebound and/or increase Florida home mortgage demand. “We are now at an all time low in affordability.”

Improved income and better Florida mortgage financing rates won’t help.

“It’s price that’s the issue,” he said.