Florida: Housing Market Slump’s Ground Zero
If the American housing market shakeout has an epicenter, it probably lies in the state of Florida. And for companies with business tied closely to that state, that is some kind of problem.
During the boom, home prices in the Miami and Tampa housing market ran up faster than almost anywhere in the country.
Goldman Sachs economists have noted that mortgage applicants - particularly speculative buyers of houses and condos - fed a boom that pushed Florida’s housing stock up far more quickly than the population grew.
Now, Goldman Saches experts believe, investors had better watch the Sunshine State’s woes carefully as Florida mortgage problems continue to widen.
Speculators who have held back on selling now bear heavy costs. According to the U.S. Commerce Department, the number of vacant homes for sale in Florida doubled last year to 4.3 percent of the state’s total housing stock.
That’s the highest housing vacancy rate in the country.
As more real estate speculators throw in the towel and adjustable mortgage rates rise, Florida home prices may have much farther to fall.
On top of beleaguered home mortgage loan providers, there are home builders, hard hit everywher without question, but getting hit hardest in Florida.
Building permits for new-home construction — an important leading indicator of activity — were 51 percent below their year-ago level in the first quarter, according to the Commerce Department.
That was twice the nationwide rate of decline for permits.
Moreover, banks with exposure to Florida real estate have been getting hurt, even some far away from the state.
In April, earnings at Webster Financial, a Connecticut-based savings and loan, warned that the bad credit quality of its Florida residential-construction loan portfolios had deteriorated.
Growing home loan problems have worsened to the point in which it’s no longer limited to just one state. If these conditions aren’t depressed, what we may have on our hands is an economic crisis.
SOURCE: Providence Journal