Black Cloud Hangs Over Florida's Home Prices, Economy
MIAMI (CBS4) - As much as some economists want you to believe the recession is over, a double-dip in home prices may be arriving sooner rather than later. And that could spell further woe for the depressed home markets in South Florida.
Standard & Poor's Case-Shiller Home Price Indices released Tuesday showed a deceleration in the annual growth rates in 13 of the 20 major markets the index analyzes. The indices found that only San Diego and Washington, DC showed annual growth.
Home prices in Miami dropped another 1.3 percent from their lows in December 2010. In a year-over-year analysis, Miami home prices dropped 4.7 percent.
The numbers from Miami continued the trend of cities posting record lows in December 2010. Overall, the composite indices for the top 10 and 20 cities analyzed were down 0.9 percent and 1 percent respectively.
Seventeen of the major markets in the top 20 posted more than three consecutive months of negative returns.
The news on home prices comes as Florida's consumer confidence dropped four points in March. Three of the index components decreased as disasters and political turmoil overseas erased January's seven point spike.
Overall, Floridians expressed confidence in their personal financial situations, but survey results from the University of Florida found consumers are weary of national economic conditions.
But, Floridians expressing confidence in their personal finances may be short-lived. According to UF's Survey Research Center director Chris McCarty, the median price for a single-family home in Florida dropped to $121,900. That's the lowest median price for a Florida home in a decade.
Sales tax revenues are coming in below estimates this year as well, McCarty said. This will in turn force the legislature to perform deeper cuts to the state budget.
As home prices continue to decline in 2011, it will also take a toll on state coffers, which rely on property taxes to fund the state. If property values drop further, it will drop property taxes and force the state and communities with a decision over just how much to cut.
Plus, with Governor Scott's pledge to do away corporate income taxes and enact a billion dollar property tax cut, there's a risk of further depressing the state's budget. That doesn't include how much money communities will lose if the state continues further budget cuts.
Factoring in rising gas prices and double-digit unemployment and McCarty said there should be a further decline in consumer confidence.
"As prices of gas and food increase, consumers already struggling to balance their budgets will grow increasingly pessimistic," McCarty said. "It is likely that the negatives will keep consumer confidence in the upper 60's to lower 70s for the next few months.
