Mixed Signals Across the Florida Housing Market

It’s difficult to gauge in which direction the Florida housing market is headed.

Employment gains in the state are still strong, but likely will slow in 2007, according to Mark Vitner, senior economist for Wachovia Securities.

At Wachovia’s Third Annual Economic Forecast breakfast in Tampa Wednesday, Vitner outlined national, state and local economic trends for the coming year.

- Nationally, the economy is about halfway through a major correction in the housing market, he said. The housing boom peaked later in the region than the rest of the country, so likely will be later to bottom out, as demand for Florida home loans remains fairly strong.

- Escalating housing prices, property taxes and insurance are impacting Florida’s competitiveness, with homes in this state costing significantly more than in Georgia and the Carolinas. He projected a decline in housing prices in Florida in 2007, and price appreciation between 2008-2015 lower than the long-run average.

- In the Tampa housing market, home building is down and home prices are up, but the metro area is still relatively affordable, with prices just 4 percent above the national median, compared to the rest of Florida where prices are 21 percent above the national median.

- Job growth in Florida is slowing, but the quality of jobs is improving, Vitner said. An economy that relies on tourism and retirees applying for Florida mortgages will drive a large number of low-paying jobs, but jobs that pay 20 percent or more above the median are growing.

- Business expansion is picking up, with outsourcing slowing and reversing. Labor costs in India are rising, prompting some companies to return jobs to the United States they previously sent overseas. In Tampa, office and industrial vacancy rates are declining, another positive sign, he added.