The recession was far worse on Florida than it realizes, but the rebound in 2015 will ‘surely put a twinkle in Kris Kringle’s eye.”
Palm Coast, FL – December 19, 2014 – A quarterly report released by the University of Central Florida (UCF) suggests that the recession was far worse on Florida than it realizes, but the rebound in 2015 will "surely put a twinkle in Kris Kringle's eye."
The report under Dr. Sean Snaith suggests that the recession in Florida started earlier than it did for the rest of the U.S., and it lasted longer, though no source tracks state economic data. According to UCF analysts, the Florida recession lasted 32 months longer than the rest of the U.S. – a total downturn of 50 months – before starting a tepid rebound in 2012.
In 2012 and 2013, the Florida economy grew by 2.2 percent, but UCF says growth has now accelerated. It predicts total growth of 2.6 percent in 2014, followed by 2.7 percent in 2015, 2.8 percent in 2016 and 3.0 percent in 2017.
While the projected growth pales in comparison to 2005's 6.7 percent, UCF says that's okay. Current projections are "based more on improvements in the fundamental drivers of the state's economy and a more sustainable fiscal situation in state and local government."
The report notes a strong improvement in Florida since the housing crisis, with median home prices rising from $122,200 to $177,000. However, "it will take many more years to recover all the wealth that was lost when the housing market collapsed and housing prices plummeted from their median price high of $257,800."
The price increase has also helped many homeowners who are no longer underwater, giving them "financial breathing room."
Rising house prices are lifting more mortgage holders in the state above the surface of the water for the first time in several years, providing some financial breathing room, though thousands of Floridians remain deeply underwater in their mortgages. Despite this progress and as noted above, RealtyTrac estimates that 28% of mortgaged homes in Florida are deeply underwater.
UCF also notes the drop in Florida's all-cash sales, from 44.3 percent in October 2013 to 39.9 percent in October this year. The big question for 2015: "Will traditional buyers pick up the slack?"
The report predicts that Florida's Nominal Gross State Product approaches the $1 trillion mark and will break it by 2018 and $963 billion in 2017 – $163 billion more than in 2013 and $242 billion more than in 2009.
"As we have gained some historical perspective and examined the revised data on the recession and subsequent recovery in Florida, the economic turnaround is looking more like a miracle," the report concludes.
The full Florida and Metro Forecast, 2014-2017, is available online.
© 2014 Florida Realtors®. All rights reserved. Reprinted with permission.