Southwest Florida Housing Market Slump Means Rise in Unemployment

The downturn in the Southwest Florida housing market and home building has caused a sharp rise in unemployment, the Sarasota Herald-Tribune reports.

• In Charlotte County, unemployment rose a full percent to 4.7 in June from 3.7 percent during the same month a year ago.
• At the same time, Sarasota County unemployment rose to 3.8 percent from 3.1, while Manatee County’s rate increased to 3.7 percent from 3.1.

“Clearly there has been a deterioration in the labor market since last year,” said David Denslow, research economist for the University of Florida’s Bureau of Economic and Business Research.

“It is due to the housing downturn.”

Counties where home building represents a larger share of the economy have seen unemployment rates rise faster than larger, more economically diverse counties.

That explains why unemployment is up sharply in Lee County and Charlotte County, while Orange and Pinellas County have seen slight increases.

With Florida real estate slumping statewide, as a whole, unemployment rose to 3.8 percent in June from 3.5 percent a year ago in the Sunshine State.

On Friday, the Agency for Workforce Innovation reported there were 16,500 fewer construction workers statewide compared with the same month a year ago, and 1,000 fewer Realtors.

Though the housing downturn has been evident in Southwest Florida for some time, one explanation for the recent rise in unemployment might be that home builders still had a backlog of orders to fill after the boo.

With Florida mortgage applicants still lined up, those builders did not start laying off workers until those orders were filled.

Another factor contributing to the apparent delayed reaction in the rate is that construction workers are highly mobile. As soon as they lose jobs, they move to find new ones and do not appear in unemployment numbers.

There were some positives to be found in Friday’s numbers, however.

“Clearly housing is having an effect,” said Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida, said.

“The good news is that the downturn is not spreading to other sectors. We are still seeing strong growth in services and health care.”

For all the concerns over Florida mortgage broker and lender practices, so far, the problems within the home loan industry have not signaled major economic disarray.

Unemployment rates in most areas of Florida remain historically low, and well below what used to be considered full employment. They also are lower than the national unemployment rate of 4.7 percent.

But most economists believe unemployment will continue to climb in the months ahead because of trickle-down effects from the slowing housing market and rising Florida mortgage rates.

“The Federal Reserve thinks national unemployment will drift up slightly from its current rate, but I think Florida will move faster,” said one economist. “That’s because of the tremendous housing boom.”

Florida’s all-important tourism and boatmaking industries may also be hit because people across the U.S. can no longer tap massive amounts of rising home equity in their real estate.

Continue reading in the Sarasota Herald-Tribune …