Economic Impact of Soft Florida Housing Market Widens
When it comes to the Florida mortgage market, the impact of slower economy is unmistakable.
A survey of residential construction across the Treasure Coast from January until April showed a staggering drop in building permits — a trend analysts believe is indicative 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, shocking declines for once-sizzling areas.
The effect of a softer housing market becomes apparent when you drive by blocks of vacant homes in what was once considered some of the hottest areas in Martin County, St. Lucie County and Indian River County.
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 South Florida for Metrostudy’s South Florida division.
Now with those employers, real estate and Florida 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 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.
DiVosta Building Corp. and KB Homes have already jettisoned their Treasure Coast divisions. The lucky employees simply had their hours cut.
“I know some subcontractors whose hours have been reduced to four eight-hour days,” said custom home builder Richard Hope of 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 hungry to just call you out of the blue for work.”
Jack McCabe, CEO of McCabe Research and Consulting, a real estate firm in Deerfield Beach said condo builders in Miami have resorted to giving away two-year luxury vehicle leases to rid themselves of 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 applied for Florida refinance home loans on their properties based on inflated values and the effects of that are about to hit this 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.”
With the number of foreclosures increasing locally and higher mortgage rates now creeping into the budgets of local property owners, the local economy will start to feel the effects of tighter consumer spending.
“We’re all feeling the affects of the housing market,” local business owner John Barczykowski said. “Everyone is tightening their belts, no doubt.”
That means the trickle effects will start to invade the economic lifeblood of the Treasure Coast — less discretionary spending on big-ticket items.
“I don’t think the loss of jobs here were reflected because many of those workers just went back to Mexico or Brazil or found work rebuilding from Hurricane Katrina,” said past president of the Treasure Coast Builders Association, Don Santos.
“I would attribute about 90 percent of that to the housing crisis,” said Bill Wallace, owner of a local automotive dealership.
“Anybody that depends on the Florida real estate market for a living isn’t doing as well as they were a few years ago.”
With a surge in South Florida mortgage foreclosures on the horizon, this is a trend that may not be abating anytime soon, either.
SOURCE: TCPalm.com
