Uncertainty is main factor delaying recovery in Florida property market, expert says
The real estate market in Florida is suffering because of the state’s high unemployment rate which is making potential buyers frightened of spending money, according to a new academic report.
With the state’s high jobless rate, Florida’s real estate outlook is plagued by uncertainty that is delaying a property recovery, says the research from the University of Florida.
‘Most economists think the recession is over, but people are afraid to spend money as unemployment keeps going up which creates problems for every sector of the real estate market,’ said Timothy Becker, director of UF’s Bergstrom Center for Real Estate Studies.
Florida’s unemployment rate increased 11% in September to its highest level since 1975 and along with a large number of foreclosures it puts Florida near the bottom of states expected to recover from the economic downturn, explained Becker.
‘Florida was the first one into the recession, and it’s probably going to be the last one out,’ he said.
He also pointed out that although bargain foreclosures are selling well the total number of sales will probably decline as job insecurity continues to grow.
There is still a lot of concern about a large wave of new foreclosures despite numbers slowing, the research found.
‘There is a lot of speculation that there could be a double-dip recession, where we recover just a little bit and then go back into recession again,’ said Becker.
Also builders are nervous. ‘Builders are very selective about what they build.
They don’t want to get into a situation where they have large inventories again,’ he added.
The report also shows that banks are still reluctant to lend and Becker said that foreign property investors may be needed for a recovery to start.
‘Everybody thinks that Florida will rebound because we have so much going for us.
The sun shines every day and there are a lot of advantages to living here.
Foreign investors see that, too, and believe their prospects are good for long-term investments,’ he pointed out.
So overall the outlook is still gloomy.
‘While there are going to be improvements some quarters and declines other quarters, we’re mostly going to be bouncing along the bottom for a while.
Uncertainty is the most dangerous market condition delaying recovery,’ Becker concluded.