Building Permits Drop Along Treasure Coast, Economy Affected

The numbers don’t lie.

An independent survey of residential construction issued across the Treasure Coast from January through April showed a staggering drop in building permits — a trend analysts say is reflective of a troubled Florida housing market and slumping buyer demand.

From January through April, Indian River County residential permits issued dropped 71 percent from the prior year while in Port St. Lucie the number of permits issued dropped 72 percent.
Residential permits dropped 70 percent in Martin County and 86 percent drop in Fort Pierce.

The effects of a softer housing market becomes apparent when you drive by blocks of vacant homes in what was once considered some of the hottest communities in Martin, St. Lucie and Indian River counties.

Subcontractors in the tile, carpet and upholstery industries were the first to experience the harsh ripple effects of the housing downturn, said Brad Hunter, who follows housing trends on the Treasure Coast and the South Florida mortgage marketfor Metrostudy’s South Florida division. Now with those employers, real estate and mortgage firms laying off workers, the ripple effect is reaching the service sector.

“There’s fewer construction workers buying lunch and getting haircuts now,” Hunter said. “That’s what I call the multiplier effect.”

This year, payrolls have been trimmed at employers such as Indian River Medical Center, the Indian River County Property Appraiser, Harbor Federal Savings Bank (now National City Bank) and the St. Lucie Building and Zoning Department.

“I know some subcontractors whose hours have been reduced to four eight-hour days,” said custom home builder Richard Hope, owner of Hope Co. in Vero Beach. “I’ve received half a dozen calls from subcontractors that are looking for work, and it’s really pointless at this point because I’m down to my best people. People have got to be really hungry to just call you out of the blue for work.”

Jack McCabe, CEO of McCabe Research and Consulting, a real estate consulting firm in Deerfield Beach said condominium builders in Miami have resorted to giving away a two-year luxury vehicle lease to rid themselves of excess inventory.

“Frankly, we are going to see a recession in 2008,” McCabe said. “The housing boom drove us all into this paper wealth, artificial wealth that drove consumer spending.”

McCabe said many homeowners went through with a Florida mortgage refinance of their homes based on inflated values and the effects of that are about to hit the state and the rest of the nation.

“Things are really bad in the Midwest and Northeast,” he said. ‘All those Baby Boomers we thought would move to Florida, well it maybe very troublesome for them to leave. For the first time last year we had more moving trucks leaving Florida than coming in because the boom made it very difficult for young families to afford living here.”

With the number of foreclosures increasing locally and higher Florida mortgage rates creeping into the budgets of local property owners, the local economy will start to feel the effects of tighter consumer purse strings.

Fran Love, owner of the Clubhouse Bar & Grill in Vero Beach said because business has dropped 25 percent since last year — she’s had to make some drastic decisions.

“We don’t open for lunch anymore, we open a 3 p.m.” Love said. “It’s like a snowball effect, everyone feels like there’s a noose tied around your neck.”

And that means the trickle effects will start to invade the economic lifeblood of the Treasure Coast — less discretionary spending on big-ticket items like boats, cars and big screen televisions.”I don’t think the loss of jobs here were reflected in our unemployment because many of those workers just went back to Mexico or Brazil or found work rebuilding from Hurricane Katrina,” said Don Santos, past president of the Treasure Coast Builders Association and president of Santos Construction.

“But if you asked how many Ford pick-up trucks have been sold during the past six months compared to last year — I bet you the dealerships would say there were down by 60 percent.”