Housing Market Continues to Batter Florida Economy

Sunshine State residents are spending less on big items and economists say it’s primarily due to one ailment: the slumping Florida housing market.

The principal problem, economists said, is that home construction and sales of existing homes have dropped even below the slowdown they had anticipated earlier this year.

The level of sales of existing homes has dropped to 1997 levels.

A sluggish Florida housing market has eroded consumer confidence and dragged down the sales of other expensive items such as automobiles.

Auto sales in Florida have plummeted in the past 18 months: In one three-month span in 2005, the state took in $1 billion from taxes on auto sales alone. The past three months: $906 million.

Sales of appliances and furniture have tumbled as well, forecasters say, with revenue from sales dropping from a high of $428 million during fall 2006 to $402 million in the past three months.

At the same time, Floridians continue to spend as much as ever have in restaurants, bars, movie theaters and clothing stores.

That has led economists to conclude that people are avoiding more expensive purchases because the Florida real estate downturn has them worried.

The economists, citing overall national trends, think that might not change until early 2009. The grim result of the bad economic news is a projected $1.5 billion shortfall in the state budget.

Lawmakers will have to cut the state’s $71 billion-plus budget by at least $1 billion during a three-week special session that starts on September 18.

Some of those cuts could hit public schools and health care programs for the poor - not exactly jump-starting a wave of Florida mortgage applications.

There is enough money in reserves to cover the shortfall, but legislators say if they don’t act now, they could face an even more serious budget problem in the spring.

State economists say they are surprised by the startling contrast between Florida’s economy today and what it was over the past several years.

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