Consumer confidence in the Sunshine State has fallen to its lowest point in a year, as more and more homeowners can’t sell their homes, and borrowers can’t get a Florida home loan. (more…)
Consumer confidence soared nationally but slumped in the Sunshine State, where the housing market’s doldrums are deepening and the Florida mortgage woes are on the rise, according to separate studies this week. (more…)
Record-high gas prices and a weak Florida housing market caused consumer confidence in the Sunshine State to fall to its lowest point since October 2005, according to a University of Florida study. (more…)
Many South Florida residents are eating out less and springing for fewer big purchases like a new car or a vacation, the Miami Herald reports.
It’s not just because of the increasing cost of living, either.
Economists talk about new consciousness among consumers who relied heavily upon their houses for their worth and are now watching the Florida real estate market slow way down.
And as the South Florida housing market slides, the new consumer psychology is rippling through the region’s economy - and is already hurting South Florida’s biggest companies.
Companies are saying they’re starting to see less business because of the housing slowdown. And it’s not just the obvious businesses within the housing industry - like real estate, Florida mortgage or construction companies - which have already seen clear hits.
Miami-based home builder Lennar, for example, reported last week that its first-quarter profit tumbled 73 percent on softness in the housing market made worse by problems with subprime lenders. Lennar warned it doesn’t expect to meet its 2007 earnings guidance.
But companies you wouldn’t automatically associate with housing are also pointing to the Florida real estate slowdown as a big culprit for less earnings, in such industries as varied as car dealerships, cruise lines and shipping companies.
In February, although prices remained relatively flat, sales of single-family homes declined by 31 percent in Miami-Dade County and 20 percent in Broward County compared to a year ago, Florida Association of Realtors data indicates.
The condo numbers were worse, and inventory has nearly doubled. And there’s little doubt that all those for-sale signs may wreak havoc with consumer confidence (psychology) as the housing market slows.
The boom saw many homeowners taking out sizable adjustable rate mortgages or simply tapping home equity out of their properties. Now, with possible Florida home loan rate increases and the equity well drying up, people are more worried and therefore more cost-conscious.
As fears of Florida mortgage problems escalate, the confidence among Floridians dropped last month, according to data released by the University of Florida last week. The index, last month at 92, declined to 86.
“Housing is an increasing problem,” said survey director Chris McCarty. “It’s very clear that people were using their home equity to fuel spending, so I don’t think this should be that much of a surprise,” said McCarty, citing the rampant speculative buying and use of exotic loans.
Economists see the housing slowdown working its way through the economy in this fashion: First, home prices slow down, then the number of people who are extracting equity from their homes also starts to taper off. That pool of money shrinking leads to fewer purchases of big-ticket items.
Last year, 16 percent of the new car purchases in the Sunshine State were made with a Florida home equity loan, said Art Spinella, the president of Oregon-based market research firm CNW Research. That compares to 9 percent in 2000.
Follow the link to continue reading in the Miami Herald …
Rising energy prices, a declining Florida housing market and a sudden dip in the stock market contributed to a six-point drop in March in Florida’s consumer confidence in March, its lowest level in six months, University of Florida economists reported.
The decline follows several slight gains in the last few months and has happened in spite of continued low Florida mortgage rates and relatively stable inflation.
The big question now remains how the housing market will affect the overall economy.
“It is now clear that the decline in real estate was worse than many had imagined, although there have been those who predicted this decline,” said Chris McCarty, director of the Survey Research Center at the university’s Bureau of Economic and Business Research in Gainesville.
The drop in consumer confidence was broad-based, with declines in all five components used to gauge the state’s level. For March the index was at 86, with 100 representing the same level of confidence for the year.
The largest drop was in the index measuring whether it is a good time to buy big-ticket items, which fell 11 points, to 98.
Expectations of U.S. economic conditions over the next calendar year fell by six points, to 79, while expectations of U.S. economic conditions over the next five years fell five points to 82.
Lately, bad credit Florida mortgage and national subprime lending problems have shaken financial markets and created a general climate of widespread panic in the industry. The consumer confidence fall is the first evidence yet of a spill over into the public mindset.
Like home builder confidence, consumer confidence is often considered an accurate gauge of future home prices and housing activity.
SOURCE: TCPalm.com
National consumer confidence levels edged up in January, but Floridians’ feelings about the economy dipped a bit, according to two surveys released Tuesday.
The Conference Board, a private research group, reports that its consumer confidence index edged up to 110.3 in January from a revised 110.0 in December, according to Wednesday’s Palm Beach Post. Analysts expected a reading between 110.0 and 110.5.
The January index was the highest in five years, suggesting that consumers will continue to be the engine behind U.S. economic growth in the upcoming months.
Consumer confidence around the country was boosted by a jobless rate in decline and a market that was chugging along and by declining energy costs.
At the same time, in the Sunshine State, consumer confidence index dipped to 89 in January from 90 in December as uncertainty over the Florida housing market continues.
“The big question is still how the slump in housing will affect consumers and the economy in general,” said survey director Chris McCarty. “In my opinion, the state will continue to experience the effects of Florida housing prices through 2007, and some of the decline in consumer confidence is due to that.”
The national consumer confidence index, which is based on a survey of 5,000 U.S. households, is closely watched because consumer confidence - like Florida mortgage rates - often signals changes in spending trends. In all, consumer spending makes up about two-thirds of U.S. economic activity.
David H. Resler, chief economist with Nomura Securities in New York, noted that January’s reading was boosted by optimism about the jobless rate, with nearly 30 percent saying jobs were plentiful.
“You’re looking at a reflection of what is making consumers feel good,” he said. “It tells you that the conditions that underpin things like consumer spending are pretty good, so people are going to spend.”
The figures also showed people are not quite as pessimistic about the car market as they were, but housing is still languishing.
Weakness in the housing market, and a decline in Florida home mortgage demand, could be seen in another report issued Tuesday.
An index prepared by Standard & Poor’s showed that the prices of single-family homes across the state (and the nation) rose in November at the slowest rate in more than a decade, a further sign that housing will be a drag on the economy.
The S&P/Case-Shiller composite index showed a 1.3 percent year-over-year rise in the price of a single-family home based on existing homes tracked over time in 10 metro areas.
Consumer confidence in Florida and throughout the Southeast remained high in the second half of this year and was sunnier than the national outlook.
However, there are doubts - mostly in the South Florida housing market.
Those recent findings are from an RBC Centura look at consumer attitudes and spending. The bank said its RBC Southeastern Consumer Attitudes and Spending by Household (CASH) Index for the second half of 2006 was 99.8 out of a baseline of 100 points, established in 2002.
That’s a slight increase from 99.5 for the first half of the year.
Southeastern consumer confidence took a nosedive in the second half of 2005, following a devastating hurricane season and subsequently higher energy costs. In the second half of 2006, however, consumer confidence levels rebounded by 25 points and stabilized during the third and fourth quarters as home loan rates remained low.
The optimistic outlook for the Southeast far outpaces the national index for the July-to-December periods - at 99.8, compared with 85.4.
RBC Centura said that deviation is not surprising because the Southeast region typically has a more-positive attitude toward the economy than the rest of the nation. There is no doubting the economic progress in Florida over the first half of this decade.
Overall, the bank said consumer confidence was driven largely by optimistic expectations for the future and confidence in job security.
With a positive outlook for the future and good job security, the Southeast seems positioned nicely for continued economic growth, RBC economists said. The drop in economic confidence following Hurricane Katrina has corrected and the Southeastern attitudes have returned to normal.
Despite a real estate market that has priced out many buyers, Florida mortgage rates have remained low, leading many to believe the worst is over for the real estate bubble. However, many don’t share this opinion, and conflicting theories permeate from local economists.
As far as negatives, RBC Centura said:
Consumer confidence is up — or is it down?
Economists from the University of Florida credit lower gas prices over the last month with boosting the Florida Consumer Confidence Index to a seven-month high.
On the other hand, the Conference Board’s national index of consumer sentiment fell last month, sparking concerns about the future of consumer spending.
Solid employment numbers and the absence of hurricanes helped the most recent numbers, but the good feelings could be fleeting. UF economists say the downturn in the Florida housing market isn’t yet reflected in the numbers.
Look no further than to the St. Joe Co. for proof that the market is going through a dry spell. When a North Florida real estate developer with some 820,000 acres to build on says the residential housing market has slowed, people listen, after all.
Meteoric rises in home prices that have left many buyers out in the cold, and the increased Florida mortgage borrowing costs over the past year have left a tepid and uncertain market in their wake.
Analysts certainly recognized this yesterday when St. Joe CEO Peter Rummell and his fellow execs said that a reasonable balance in housing inventory and supply and demand will not return until 2008. Especially in “Northwest Florida” as St. Joe prefers to refer to the state’s Panhandle.
While St. Joe’s economic and political clout has never been doubted, it was notable a slightly humbled Rummell told analysts that “the viability of the Northwest Florida market is now recognized… we are convinced we did the right thing there.”
Like many other developers and home builder organizations, St. Joe has been scaling back development after five straight years of record growth.
A number of factors we talk about often, such as rising Florida mortgage expenses and the costs of insurance and energy, top the list of concerns among the state’s employees. As a result, the Florida Employee Confidence Index dipped 2.1 points to 57.5 in August, according to a recent survey conducted by Harris Interactive on behalf of Spherion Corp.
Overall worker confidence has fallen off sharply primarily because fewer Sunshine State workers reported optimism in the strength of the Florida economy and confidence in their ability to find a job.
Although the survey shows the Employee Confidence Index dropped in August, workers remained confident in the future of their employer. Specifically, 61 percent of workers are confident in the future of their employer, which represents no change from July.
The Ft. Lauderdale company noted workers’ feelings about their own job security remained upbeat, with only 8 percent reporting it’s likely their jobs will be eliminated in the next 12 months, down 7 percentage points from July.
“Considering the instability of the stock market, slowdown of the Florida housing market and higher energy costs, it is no surprise that confidence took a dip this month,” said Dawn Gill, district director of Florida for Spherion, in a release.
“Qualified candidates continue to be very difficult to find and because of this employers are more willing to recruit applicants from outside their city or state job market. In addition to this trend, we are seeing more personality tests being given to candidates to make sure that new hires not only have the right skills, but also the right cultural fit for the organization,” she said.
The cost of living in the state has risen much faster than employee salaries, resulting in plenty of concern among workers and government officials alike. In addition to the cost of buying a house, there are all the expenses that go with it. Energy costs, property insurance and local taxes all add up to take a major bite out of monthly income.
As the Miami housing market slows down and demand for Florida mortgage loans remains low in the area, developers have been forced to re-evaluate their plans. This isn’t necessarily a bad thing. But the effect of the situation on consumers in the city is a bit worse.
According to survey data from the University of Florida, the gap between consumer perceptions in Miami-Dade County versus the rest of the state is getting wider, with local residents increasingly feeling more negative about their personal financial situations. They aren’t applying for Florida mortgage loans of any kind, they aren’t confident about selling their homes and they fear for the future.
Consumer confidence hits a snag
For the first six months of this year, Miami-Dade consumer confidence took a sharp drop compared to the rest of the state. On an index of 100, Miami-Dade measured 76 compared to Florida’s overall 86. Last year Miami-Dade was 83, just three points behind the rest of the state.
Survey research director Chris McCarty attributes the Miami negativity to a combination of a slowing housing market and rising gas prices.
”Miami is poised to take it on the chin from the real estate market,” said McCarty, who notes that for many consumers, especially in South Florida, real estate had been a big source of wealth. That’s more difficult now with lenders tighter refinancing requirements. Others with adjustable rate Florida mortgages are feeling the rise in interest rates.
”People always depended on the fact, you could always sell your house,” he said. “But even here in Gainesville, houses are sitting much longer.”
Unlike Miami-Dade, respondents in Broward County have similar perceptions as the rest of the state, McCarty said, although the sample size for Broward is smaller than in Miami-Dade. In that region, at least work is being done on affordable housing, an attempt to satisfy lower-income buyers seeking a Florida mortgage loan.
McCarty doesn’t see local or statewide confidence improving for a while.
”The effects are probably going to linger through the remainder of this year and probably the beginning of next year,” he said, as the real estate market continues to cool off. “A lot of people think we’ve only begun to experience the effects in Florida.”
Across the country, real estate is no longer driving the economy. It’s unclear what this will mean for consumer, but home sales are STILL expected to be the third highest ever on record. It may be too early to panic.
