Miami Herald: Signs point to recession’s easing in Florida
Sep 30, 2009
The Miami Herald published this article on September 30, 2009
By MONICA HATCHER
Two key economic markers in Florida — consumer confidence and a much-watched home price index — showed a second consecutive month of improvement, offering further evidence the recession is easing, though a long recovery likely awaits.
The S&P/Case-Shiller home price index showed South Florida home prices posted their second, though modest, monthly gain of 1.3 percent in July, as strong sales and shrinking inventory helped to firm up prices. The index, however, was still down from a year ago, by 21 percent.
Nationally, consumer confidence dipped by 1.4 percent to 53.1 in September, according to The Conference Board, a New York-based business research group. That not a good sign for retailers whose hopes are pegged to robust holiday spending.
Bucking the national trend, however, new figures from the University of Florida show consumer confidence rose three points in September to 74, following a revised increase of four points in August. The two-month trend indicates more than a margin of error as previous blips in the index may have suggested.
“This is real,” said Chris McCarty, survey director of UF’s Bureau of Economic and Business. “Consumers have been hearing the recession is over, or the worst of it, and this is a reflection of that,” he said.
Stabilization of the stock market, falling gas prices and a bottoming-out in home values in many parts of the state have helped, McCarty said. “A big part of the problem was the lack of knowledge of what your wealth actually was. A house is a big part of wealth and when prices are falling you just don’t know what you have,” he said.
Floridians, however, are still pessimistic about the state of their own personal finances. The UF survey showed that consumer sentiment stayed at 44 in September, the same as the previous month, which is only five points better than its lowest point ever in December.
Florida’s shaky employment market could be to blame. Unemployment stands at near 11 percent. Mark Vitner, an economist with Wachovia who tracks Florida, said he expects the unemployment rate will increase until the year’s end.
`BEHIND US’
“We will see losses gradually dissipate into the middle of next year and by late 2010 we should start seeing improvements and gains,” Vitner said, “The bulk of the large layoffs are behind us. What employers are doing now is reducing employment through attrition, but they are not making wholesale adjustments to their staff.”
The Case-Shiller index, which uses a complex algorithm to measure repeat sales of the same homes in a market, rose in July by 1.3 percent in the greater Miami metropolitan area, following a .5 percent increase in June. The index does not include condo prices.
Recently released statistics from the Florida Association of Realtors, which look at the median sale price of homes listed by Realtors, showed the median existing single-family home price in Miami-Dade rose 1 percent between July and August to $194,800 and decreased by 1 percent in Broward to $217,000. The medians were down 29 percent and 20 percent, respectively, compared to a year ago.
STRUCK BOTTOM?
Taken together, the Realtor and Case-Shiller numbers appear to indicate the market has struck bottom, though some analysts predict the expected release to the market of a backlog of foreclosed homes could keep prices depressed for some time.
The Case-Shiller national index, which measures home prices in 20 major metropolitan markets, rose 1.6 between June and July, but prices in all cities remained below year-ago levels. Only two of the 20 markets studied saw month-to-month price declines, Las Vegas and Seattle.