Florida was one of the first states to feel the effect of a national recession with job losses starting in April 2007. Florida was slow to join the recovery. It has now turned the corner.
Palm Coast, FL – April 2, 2014 – The Institute for Economic Competitiveness, College of Business Administration of the University of Central Florida recently released its Florida & Metro Forecast: 2014-2017. Highlights from the report that are pertinent to Palm Coast’s recovery and future economic development include the following Florida facts and projections:
- As of January 2014, 49.1% of single-family home transactions are cash sales, down slightly from 50.5% a year earlier. This suggests a continuing high level of investor activity in Florida’s housing market. [GoToby.com would argue that it also reflects the affects of tight lending and appraisal standards.]
- Labor force growth in Florida will average 1.6% from 2014-2017. This will dramatically slow the pace of decline for the unemployment rate in the state. Labor force growth will have averaged just 0.8% during 2010-2013, and is in large part responsible for the rapid pace of the decline in the unemployment rate during that time period.
- Unemployment rates have fallen from their peaks, in part due to a low labor force participation rate (59.6% in December 2013), and they will continue to decline through 2017. The pace of decline will slow dramatically as labor force growth picks up. Despite this significant headwind, the unemployment rate should hit 5.4% by the end of 2017.
- Underemployment in Florida, a broader measure of labor market weakness than headline unemployment, came in at an average of 14.3% for 2013, down from 16.0% in 2012.
- The sectors expected to have the strongest average growth during 2014-2017 are Construction (10.0%); Professional and Business Services (4.3%); Trade, Transportation & Utilities (4.0%); Education & Health Services (2.3%); and Leisure & Hospitality (1.8%).
- Housing starts jumped in 2013. Total starts will be over 108,000 in 2014, just under 144,000 in 2015, hit 161,600 in 2016, and 165,500 in 2017. This growth in residential activity will catalyze growth in the commercial sector both pushing employment growth and construction into double-digits.
- Low inventories and rising house prices have triggered a surge in home construction. Housing starts will average 32.5% growth during 2014-2017. The most rapid growth will be in 2014 and 2015.
Regarding the housing market, the study concludes:
The housing market in Florida continues to climb out of the depths of a deep and protracted depression, but the ascent still ahead is not without obstructions. The state still has a long journey ahead of it before we can declare that the sector has fully recovered.
If the availability of housing finance does not improve over the next couple years, and if the share of cash transactions continues to fall as we are predicting they will, demand for housing will be inhibited, and this will usurp the vigor of the housing market’s recovery. In 2014 we will likely see the signs of this weakening begin to manifest themselves in the form of slower price appreciation and slower sales growth, and 2015 will further exhibit these signs.