The International Conference of Shopping Centers chief told area developers and retailers that the meltdown in the bad credit mortgage market will reverberate to Florida, but there is no need for hysteria. (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…)
Sunshine State retailers can expect a keep-your-fingers-crossed holiday shopping season in the upcoming months, experts predicted this week.
Due in large part to a sagging real estate market, analysts expect a modest 5 percent increase in holiday spending this year, compared with a 6 percent rise the year before. The University of Florida released a study Friday indicating most people plan to spend about the same as last year.
That assessment is seemingly at odds with still-affordable Florida mortgage costs, falling gas prices, rising stock prices and unemployment remaining comfortably low, particularly in Brevard County, where the jobless rate is 3.4 percent.
Retailers often count on sales in final months of the year to nudge them into profitability territory. That, in turn, affects their expansion and hiring plans, as well as the amount of sales-tax revenues that pour into county budgets. But UF’s survey results showed:
A current rosy economic outlook in Florida is tempered by concerns about the housing market and the volatility of gas prices. Energy prices have been dropping considerably, but people still are concerned they could go up again. And, at a time when Florida home mortgage rates are still low, those with loans of the adjustable-rate variety are still getting pinched.
Monthly house payments will rise, leaving less disposable income.
Still, Scott Krugman, a spokesman with the National Retail Federation (NRF), predicts U.S. consumers will spend $457.4 billion this holiday, a 5 percent increase over last year. Holiday sales in 2005 were $435.6 billion, a 6.1 percent increase from the 2004.
“We had a very strong season last year, which leads to tough comparisons,” Krugman said.
Some shoppers are more optimistic than others about the state’s economic future, and that’s reflected in how much they plan to spend at stores. Lenita Kelly of West Melbourne, Fla., said she is upbeat about the economy. Her plans are to spend more on her two children this year than last year.
“The job market is better now,” Kelly said.
Carmen Cruz of Palm Bay will spend less.
“I’m retired, and I don’t have as much money as I did before,” Cruz said.
BOTTOM LINE: If you’re currently making payments on one or more exotic Florida home loans, consider refinancing to a fixed-rate mortgage. That way, even as energy prices and other living costs fluctuate, at least you will be able to count on consistent housing payments!
Americans are resilient. Even as Florida home loan rates continue to rise - and gas prices sky-rocket - consumer confidence improved throughout June.
The University of Michigan’s Survey of Consumers stated that the Index of Consumer Sentiment was 84.9 in the June 2006 survey, up from 79.1 in May. Most of the gain this month was in individuals’ evaluations of current economic conditions; investors in Florida real estate, for example, still see potential for profit.
“Rather than a free-fall in confidence that has sparked recessions in the past, consumers have demonstrated a resilience based on a newfound sense of long-term economic stability,” said Richard Curtin, director of the survey.
Taking out Florida home loans, analyzing spending: The year ahead
While consumers will curtail their spending in the year ahead to accommodate higher gas prices and smaller cash-outs from Florida home loan refinancing, the spending cutback will be moderate.
While high energy prices are no longer viewed as temporary, individuals have not abandoned their view that inflation will revert to lower levels over the longer term. For the near future, however, they are concerned.
“Just one-third of all consumers expect their financial situation to improve, with a rising number that expect inflation to offset any wage gains they receive during the year ahead,” said Curtin.
Only time will tell the results, of course. For now, potential buyers just need to organize their debts and look at their credit score if they wish to be approved for a Florida home loan.
As the Federal Reserve hikes up Florida home loan rates, along with nationwide interest, it concluded its quarterly survey of lenders in April. Overall, 57 domestic banks and 19 foreign banks operating in the U.S. were polled?
The results?
Banks reported a continued decrease in demand for consumer and mortgage loans, but the pace of slowing for mortgages appeared to ease.
According to the Wall Street Journal, a net fraction of more than one-fourth of domestic banks reported weaker consumer loan demand in the survey. That figure was about the same percentage as in the Fed’s January survey, while representing a larger pool of responding lenders.
Similarly, a net fraction of one-fourth of domestic lenders reported weaker demand for mortgages to purchase homes. But the Fed described this measure as “considerably smaller” than in the January survey, when a net fraction of 44% reported slower mortgage demand from home buyers. In other words, the landing is appearing soft; Florida home loans are being acquired in greater number.
What about the issue of credit?
Domestic banks reported little change from the previous three months for credit card and non-credit card consumer loans. Meanwhile, about 10% of domestic banks said they had eased credit standards for residential mortgages.
In the market for business and commercial real estate loans, the Fed survey shows domestic banks and foreign banks had differing experiences with demand.
Among domestic banks reporting easier business-loan credit standards and terms, nearly all cited “more-aggressive competition from other banks or nonbank lenders as an important reason for having done so,” the Fed said. “Increased liquidity in the secondary market for these loans and increased tolerance for risk” were cited as reasons for looser lending practices.
These findings mirror what we’ve recently reported. The 2006 housing market may not be as prosperous as years past, but Florida home loan demand is returning as months pass by.
A slowdown in the sizzling South Florida housing market, combined with rising energy prices, is likely to curb retail spending in 2006.
The normally optimistic National Retail Federation is cautious in its forecast this year, calling for a 4.7 percent growth in 2006 sales, a drop from the 6.1 percent gain retail sales showed in 2005. Overall consumer spending, which rose 3.7 percent in 2005, will increase only by an estimated 2.8 percent this year, writes Elaine Walker of the Miami Herald.
”While we don’t expect the housing bubble to burst, we are beginning to see some leaks,” said Tracy Mullin, the organization’s president.
As home prices have escalated in South Florida and across other areas of the country, a great number of consumers have been cashing out in recent years. They have turned to Florida home equity loans, capital gains from home sales and refinancing in order to generate cash for home improvements or other expenditures. But this trend will likely slow. As mortgage rates creep up, as they are expected to do this year, consumers will be less anxious to tap that equity.
Freddie Mac estimates that about $205 billion was extracted from home values in 2005, up sharply from $142 billion in 2004. A study by the Federal Reserve concluded that money from home values added around $700 billion to the United States’ economic activity last year, a sum that translates into as much as 8 percent of what consumer’s spent overall.
That’s been a windfall for retailers — particularly warehouse merchants, building material stores, and electronics retailers — many of which reported double-digit increases in 2005.
But as the housing market slows, expect building material and furniture stores to be the first to see an adverse impact on sales. The areas of clothing, electronics, food/beverage, and health/personal care are projected to remain relatively strong. Retail analysis believe sales will be more modest, but still outperform the average. Like many housing market forecasts, the insiders are looking at a softening, not a crash.
Despite the cautious projections, retailers are coming off a better-than-expected 2005 holiday season. Overall sales increased 6.4 percent in November/December over 2004, as consumers spendt a total of $438.6 billion. Nothing grim is on the horizon for this coming year, but those who make gains will have to get more creative. Retail industry analysts say that, in 2006, the key to success be simply who can best understand their consumer base.
”It used to be all about the product. Now, it’s changed to being all about understanding the customer and what do they want to buy? It’s about really getting inside the consumer’s mind,” said Janet Hoffman, managing partner of North American retail for Accenture.
The lesson? The going rate of Florida home loans impacts a whole lot. As mortgages go, so goes the housing market, and with that a major portion of the U.S. economy. Stay tuned.
Consumer spending increased by .5% in September, as incomes also rose and the economic outlook improved around the nation. According to the Commerce Department, the market is holding up surprisingly well, despite the effects of Hurricanes Katrina and Rita. This recent rise in spending following a dip in August of the same percentage.
Americans’ incomes, meanwhile, increased by 1.7% in September, the largest gain since December 2004. That marked an improvement from the 0.9 percent plunge in incomes in August — a decline that mainly reflected fallout from Katrina.
While the marketis surviving the storms, they still had major effects. Uninsured losses to residential and business property reduced incomes by about $5 billion on an annualized basis in September and by about $240 billion, annualized, in August, the government estimated. Spending growth for September matched economists’ expectations, but the increase in income was larger than forecast.
In-depth Consumer Spending
So what are these numbers reflective of? Despite the sting of high energy bills, consumers spent briskly in the third quarter, helping the economy grow by a 3.8 %annual rate, the government reported last week. Consumer spending in the July-to-September quarter reflected a big appetite for big-ticket durable goods, such as cars, which had been discounted and promoted to lure buyers.
Consumer spending should slow down in the final three months of this year, as auto sales drop off with the waning of generous incentives and energy prices cause belt-tightening. Analysts are predicting that any moderation in consumer spending, however, will be more than offset by stronger spending elsewhere, which should allow the economy to grow at a solid pace in the current October-to-December period.
Despite the solid spending last month and the continually strong home sales, consumer confidence in the economy has been plummeting, as people are growing anxious about President Bush’s economic leadership. The public’s perception has been shaped by the following:
High energy bills
The hurricanes and job losses wracked up from the disasters
To combat inflation, the Federal Reserve is expected to boost interest rates by another quarter-point on Tuesday, the 12th increase of that size since June 2004.
