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REVIEW & COMMENT
Glimpses of the rebound
by Rod Thomson, Executive Editor
You won't probably see it much outside this publication, but the gloom and doom market for economic reporting should be drying up along the Gulf Coast as the year progresses, with the Sarasota-Bradenton market leading the way.
Unfortunately, government leaders and some turn-the-clock-back citizens groups have worked to put Sarasota and Naples in weak positions to take advantage of the coming rebound, and are undermining the recovery in other Gulf Coast markets.
The news is still spotty, but some important numbers are trending up which, given the markets they represent, suggest that the signs of early recovery the housing and credit markets is taking hold. That is critical because those sectors, in that order, led the way into the economic downturn and will lead the way out.
The numbers, reported by Metrostudy give reason for qualified optimism, particularly in the Sarasota-Bradenton market and the Naples market, which responded quicker to the downturn and, thus, should indicate where other markets are headed. Lee County remains the region's basket case.
Here are some key statistics to bolster the case that, while difficulties remain, we are on the cusp of an economic recovery.
• Jobs. Sarasota-Bradenton's job loss is pegged in government figures at 13,000 during the past 12 months. But Tony Polito, in Metrostudy's Tampa office, suspects that is too high and is including reductions among staff leasing companies headquartered in the region. He places the construction figure loss at 5,000.
"We're dealing with some job loss, but not as bad as portrayed," he says.
Despite being a much larger market, Tampa Bay's job losses were only at 7,700 the past 12 months. Fort Myers and Naples combined to lose 21,300 jobs in the same 12 months, with most of those in Fort Myers.
The good news is that despite the steep job losses, the unemployment rate in Tampa and Naples is still below the national average of 5.3%, and in Sarasota is right at it. Only Fort Myers is above the national average, and by quite a bit at 6.5%.
(For the record, the one sector in all regions that consistently showed strong job growth: government. That may not be the case for all of 2008 as voters rebelled against free-spending local governments and the Legislature forced some spending sense.)
• Housing. The re-sale market, or existing home sales, is much stronger than the new-home market. While painful for homebuilders, that is a necessary prerequisite to bringing the market into balance, given the glut of existing homes for sale. And there is considerable good news here.
First the bad news. Finished, vacant housing in Lee County dropped by 15%, which is good, but its supply stands at about seven months, more than three times what it should be. Collier's finished vacant units actually climbed about 5%, but it is only a four-month supply, twice what it should be.
Now the good news. Finished, vacant housing inventory in Tampa Bay decreased more than 28% to 3,393, while the same completed but unoccupied homes in Sarasota-Bradenton fell by nearly 48% to 1,722. These numbers are a big move in the right direction because once they are cut by about half again, the new-home construction market will enter that glorious state of equilibrium that economists have been waiting for. Barring a catastrophic national economic decline, that should herald a rebounding new housing market, even perhaps a strong one with retiree demographics.
But maybe not in Sarasota and Naples. With a series growth-blocking initiatives and a decidedly anti-business, anti-growth majority on the county commission and city commission, Sarasota has set the stage for excluding itself from the strength of the economic renewal. Collier County government leaders are on a similar path with prohibitive impact-fee levels and an attitude toward private enterprise and anyone not retired with wealth that smacks of pre-revolution French nobility. "Let them eat cake!" - or, in this case, "Let them live in Immokalee!"
• Confidence. There is no denying that consumer confidence in Florida is low, at its lowest level since 1991, according to the most recent University of Florida survey. That is what you may have read. But there is more to the story. Even though Florida is one of the hardest-hit states because of the sharp housing downturn, consumer confidence among Floridians remains higher than the rest of the nation.
The University of Michigan's national consumer confidence index is the lowest it has been in 26 years - since the merciful end of the Carter malaise days. That stands at 59.5, while the Florida survey stands at 66. Further, the one component of the Florida consumer confidence survey that rose was among those who think now is a good time to buy big-ticket items. It went three points up to 67.
That intent-to-buy impulse is a necessary component of any recovery. Without confidence in the economic future, people don't spend and the economy does not recover.
Many factors could still undermine the recovery. A terrorist attack. Oil disruptions, the slim risk of stagflation or the election of more tax-raising, regulation-heavy politicians.
Generally, economists do not have much confidence in the federal stimulus package Congress passed and President Bush approved. Government spending is just not the source of economic growth. "The rebate checks will stimulate the economy for all of about 48 hours," Polito says. "It's going to take a bigger fix in the economy than that."
But there is good reason to have confidence in retirees, who are still driving growth in Florida, even in recent months. They will continue to because the Baby Boomers are just starting to retire and the Gen Y'ers, who echo the boomers in size, will just start retiring after the boomers finish.
That's a lot of supply of potential Florida residents for as far as the economic eye can see.
Rod Thomson is executive editor of the Gulf Coast Business Review and can be reached at [email protected].
AFFORDABLE HOUSING
ANNUAL STARTS BY PRICE
Price Range Closings
$0 to $149,999 59
$150,000 to $199,999 407
$200,000 to $249,999 733
$250,000 to $299,999 1,034
$300,000 to $349,999 939
$350,000 to $399,999 729
$400,000 to $449,999 557
More than $450,000 1,197
Source: Metrostudy
While Sarasota County has embarked on a taxpayer-funded plan to build 750 affordable housing units over the next several years, the first two lines on this chart demonstrate that the market is already handling that need. More than half the number that the county is planning with its ballyhooed program are already being built. Of course, those are likely in North Port because city and county decisions are making North County unaffordable.
BY THE NUMBERS
Single-family quarterly starts
Metro area 1Q 2007 1Q 2008
Tampa Bay 2,240 1,277
Sarasota-Bradenton 778 417
4Q 2007 1Q 2008
Lee County 189 221
Collier County 420 883
Source: Metrostudy
These numbers are not a direct comparison between the Tampa Bay-Sarasota-Bradenton and Lee-Collier markets, but they show the dramatic weakness in the Lee County housing market. It is almost dead and will take much longer to recover than the other Gulf Coast markets.
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