Florida, the favored retirement Mecca and employment destination of choice is anticipating a dip in population growth, running at the lowest level in almost 60 years. According to research recently released by the University of Florida, projected growth has declined more than 90 percent off of the annual average between 2002 and 2006.
Both job creation losses and the housing bust are cited as failures according to the report, as primary reasons why they expect to see population loss. Last year, the state lost 350,000 jobs.
The current data still manages some bright spots, including an estimated 37,000 people likely moving to Florida from 2008 to 2010. And Florida remains a favored tourist destination, albeit at a slower pace than several years ago.
The real impact, as the excess housing inventory is absorbed, and affordability returns to a more structured pace is the loss of significant numbers of highly mobile, qualified renters. It will take, by most estimates, between 6 and 10 years for levels of rental demand to return to anything even remotely close to normal, in all but a few places. Hardest hit will be south Florida, followed by central parts of the state.
It then comes down to investment considerations. Florida, considered by many to be overbuilt, overpriced and with limited elasticity in pricing for rentals, is seemingly less attractive than other regions of the United States. In many respects, Florida, a perennial favorite among sun worshippers is losing its status as a Wall Street investment grade market. The one word most often used to describe Florida by investment managers is “disaster.”
The volume of foreclosures and the balance between documented and undocumented residents in South Florida will assure the survival of lower cost housing, and limit the price growth many investors are hoping for. In most neighborhoods, volumes of foreclosure have risen to levels that have created a drag on existing home sales, and as prices collapse, so too it seems do the dreams and aspirations of long time Florida residents.
Recently, Justin Gredier, associate director of HHF, was quoted as saying, “if people weren’t moving here because of the jump in a number of alligator attacks, it would be more concerning long term.”
If only it were that simple.
(Jack Kern is the Managing Director Kern Investment Research, LLC and hangs out at the beach in Ft. Lauderdale occasionally, trying to recapture his spent youth, wasted practicing rock guitar and drinking tequila. He enjoys seeing wild life on the beach, except for that nagging suspicion that somehow if you just built the right kind of condo over there…)