Floridians’ consumer confidence rose another two points in May to 81 – a third straight month of increases for a post-recession high, according to a University of Florida (UF) survey.
“The last time confidence was this high was August of 2007 when it was 82, shortly before the Great Recession began,” says Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research.
Three of the five components used to determine the Florida Consumer Sentiment Index increased. Respondents’ expectations that their personal finances will improve a year from now rose three points to 82. Meanwhile, their overall confidence in the nation’s economic conditions over the coming year increased two points to 81.
Floridian’s trust in the national economy over the next five years surged, rising eight points to 85.
The survey showed a decline in two components, however. Survey takers’ perception that they’re better off financially now than a year ago fell three points to 68. In addition, their confidence in the timing to buy a big consumer product right now, such as an automobile, fell one point to 89.
Overall, though, Floridians’ confidence shows an upward trend.
“(Last month’s) increase was largely due to increased confidence among respondents under age 60, who were optimistic about their personal finances and U.S. economic conditions,” McCarty says. But this month’s increase found that older Floridians are even more optimistic. Confidence among respondents 60 and older in the national economy over next five years increased 15 points to 88.
“As the headlines turn to news other than budget cuts and possible changes to Social Security, consumer confidence improves for Floridians,” McCarty says. “This is especially true for seniors.”
Meanwhile, positive statewide economic news also boosts confidence. The legislative session in Tallahassee recently ended with a budget increase for the first time in several years. April’s unemployment rate was 7.2 percent, a drop of three-tenths of a percent from March. Construction, retail trade and service sectors saw job increases. Home sale prices improved again by $5,000 to a median price of $165,000. Sales have been strong, and new home construction is under way in some areas of Florida.
The stock market also reached record highs in May.
So far, most Floridians have not experienced the negative effects of sequestration. However, this could change as wide-reaching cuts in services and jobs trickle into the economy, McCarty says.
That process may have already begun. Employment in leisure and hospitality is down from March, and Florida’s sales tax revenue in April was less than expected. McCarty suggested sequestration might have affected plans for vacations for workers in other states.
“Our expectation is that the effects of sequestration will be more fully realized as the summer progresses and confidence will likely stay the same or pull back slightly,” McCarty says. “For now, optimism among Floridians is growing.”
Conducted May 13-23, the study reflects the responses of 410 individuals, representing a demographic cross-section of Florida. The index used by UF researchers is benchmarked to 1966, which means a value of 100 represents the same level of confidence for that year. The lowest index possible is a 2; the highest is 150.
Source: 2013 Florida Realtors®
Thursday, May 30, 2013
Tuesday, May 28, 2013
Commercial Report Finds Credit to be 'Unnecessarily Tight'
Things are looking up in the commercial real estate market, but financing remains a challenge for small businesses, according to the National Association of REALTORS®’ quarterly commercial real estate forecast.
“The wheels appear to be greased for the big players, but not so much for small business,” said Lawrence Yun, NAR’s chief economist. “Despite the improvement for major commercial properties, 52 percent of REALTORS® report they had a commercial transaction fail in the past year due to a lack of financing... In addition, 42 percent of respondents said clients failed to complete a refinancing. Credit for small business remains unnecessarily tight.”
The Commercial Real Estate 2013 Lending Survey, a companion report to the forecast, shows widely-varying access to lending capital depending on property size, with a significant disadvantage for buyers of smaller properties.
Commercial sales volume of major properties valued at $2.5 million and above increased 24 percent in 2012 to $294 billion. However, REALTORS® in the commercial sector reported that 85 percent of their clients’ transactions are for purchases under $2 million—generally small businesses. These transactions are financed largely by private investors, along with local and regional banks, marking a bifurcation in capital availability based on property value, according to NAR.
Commercial members also reported that new and proposed legislative initiatives, as well as regulatory uncertainty for financial institutions, account for the lack of capital in commercial lending for smaller properties.
Source: NAR
“The wheels appear to be greased for the big players, but not so much for small business,” said Lawrence Yun, NAR’s chief economist. “Despite the improvement for major commercial properties, 52 percent of REALTORS® report they had a commercial transaction fail in the past year due to a lack of financing... In addition, 42 percent of respondents said clients failed to complete a refinancing. Credit for small business remains unnecessarily tight.”
The Commercial Real Estate 2013 Lending Survey, a companion report to the forecast, shows widely-varying access to lending capital depending on property size, with a significant disadvantage for buyers of smaller properties.
Commercial sales volume of major properties valued at $2.5 million and above increased 24 percent in 2012 to $294 billion. However, REALTORS® in the commercial sector reported that 85 percent of their clients’ transactions are for purchases under $2 million—generally small businesses. These transactions are financed largely by private investors, along with local and regional banks, marking a bifurcation in capital availability based on property value, according to NAR.
Commercial members also reported that new and proposed legislative initiatives, as well as regulatory uncertainty for financial institutions, account for the lack of capital in commercial lending for smaller properties.
Source: NAR
Tuesday, May 21, 2013
Economic Growth Boosted by Housing Sector
The housing market is expected to become a “meaningful contributor” to U.S. economic growth this year and for the foreseeable future, says Ron D’Vari, NewOak CEO and cofounder.
For this year, the housing market sector is expected to provide an estimated 0.5 percent rise to the gross domestic product this year, D’Vari notes.
"While the gradual stabilization of home prices kept the economy from falling into a tailspin, other factors [government and consumer spending] helped dig the economy out of the great recession," D’Vari says. "Until recently home building and related activities were not contributing much to the GDP as housing construction had fallen to its lowest historical levels, far below its natural equilibrium."
The housing sector can affect many areas of the economy, such as mortgage finance, construction companies, general contractors, home furnishings, and appliances, and more.
"Because of large reliance labor, the economic multiplier to the housing sector has been high,” D’Vari says. “Therefore smart investors will be trying to read the tea leaves of the housing sector looking for telltale signs of the U.S. economic growth.”
Source: “Housing begins to directly contribute to economy,” HousingWire (May 20, 2013)
For this year, the housing market sector is expected to provide an estimated 0.5 percent rise to the gross domestic product this year, D’Vari notes.
"While the gradual stabilization of home prices kept the economy from falling into a tailspin, other factors [government and consumer spending] helped dig the economy out of the great recession," D’Vari says. "Until recently home building and related activities were not contributing much to the GDP as housing construction had fallen to its lowest historical levels, far below its natural equilibrium."
The housing sector can affect many areas of the economy, such as mortgage finance, construction companies, general contractors, home furnishings, and appliances, and more.
"Because of large reliance labor, the economic multiplier to the housing sector has been high,” D’Vari says. “Therefore smart investors will be trying to read the tea leaves of the housing sector looking for telltale signs of the U.S. economic growth.”
Source: “Housing begins to directly contribute to economy,” HousingWire (May 20, 2013)
Wednesday, May 15, 2013
Job Shortage? Builders Can’t Find Enough Workers
U.S. builders and the subcontractors they depend on are struggling to hire fast enough to meet rising demand for new homes.
Builders would be starting work on more homes – and contributing more to the economy – if they could fill more job openings.
In the meantime, workers in the right locations with the right skills are commanding higher pay.
Consider Richard Vap, who owns a drywall installation company. The resurgent housing market has sent builders calling again. Vap would love to help – if he could hire enough qualified people.
“There is a shortage of manpower,” says Vap, owner of South Valley Drywall in Littleton, Colo. “We’re probably only hiring about 75 or 80 percent of what we actually need.”
The shortage of labor ranges across occupations – from construction superintendents and purchasing agents to painters, cabinet makers and drywall installers. The National Association of Home Builders says its members have complained of too few framers, roofers, plumbers and carpenters. The shortage is most acute in areas where demand for new homes has recovered fastest, notably in Arizona, California, Texas, Colorado and Florida.
The problem results largely from an exodus of workers from the industry after the housing bubble burst. Experienced construction workers lost jobs. And many found new work – in commercial building or in booming and sometimes higher-paying industries like mining and natural gas drilling – and aren’t eager to come back.
Hispanic immigrants, largely from Mexico who had filled jobs during the boom, were among those who left the industry and, in some cases, the United States.
Dave Erickson, president of Greyhawk Homes in Columbus, Ga., lost an employee who took a job this year in Texas. The former employee is now installing fiber-optic cable and earning 30 percent more than he did as a construction supervisor.
“I think he’s frustrated with the cycle we went through in recent years,” Erickson says.
A shortage of labor in a well-paying industry might seem incongruous in an economy stuck with a still-high 7.5 percent unemployment rate. But it reflects just how many former skilled construction workers have moved on to other fields.
In 2006, when the boom peaked, 3.4 million people worked in homebuilding. By 2011, the figure had bottomed at about 2 million. As of last month, about 2.1 million people were employed in residential construction.
Jobs in the industry did rise 4.1 percent in April from a year earlier, faster than overall U.S. job growth. But they’d have to surge 24 percent more to reach 2.6 million, their 2002 level – “the last time the market was normal,” says David Crowe, chief economist for the National Association of Home Builders.
For now, the industry is building faster than it’s hiring. In February, builders began work on single-family homes at the fastest pace in five years. And in March, new home construction broke the 1 million mark for the first time since June 2008. Permits for future construction are also near a five-year high.
In the 12 months that ended in March, housing starts surged 47 percent. Yet over the same period, the industry’s employment grew just 3.7 percent.
Normally, a rebound in home construction helps propel an economy after a recession. But even with the steady gains in housing starts, sales and prices since last year, the industry remains below levels considered healthy.
The National Association of Home Builders says nearly half its members who responded to a survey in March said a scarcity of labor has led to delays in completing work. Fifteen percent have had to turn down some projects.
“I can’t find qualified people to fill the positions that I have open,” says Vishaal Gupta, president of Park Square Homes in Orlando, Fla. If not for the labor shortage, “I would be able to build more homes this year and meet more demand than I can handle today.”
Gupta’s company is facing a side effect of the labor shortage: Demand for higher pay from qualified workers. On some occasions, he says he’s been outbid by rivals that need contractors for their own projects. Gupta’s preferred paint contractor left for a rival that paid more. His new cabinet contractor is about 10 percent more expensive than the one Gupta used before.
The higher pay they’re handing out helps explain why builders have been gradually raising prices on new homes. The median price was $247,000 in March, up about 12 percent from the same month in 2011, the Commerce Department says.
The industry may have to look more aggressively for workers at vocational schools, federally funded programs like Job Corps and elsewhere, says Crowe of the homebuilders group.
“We’ll have to recruit more,” he says.
Vap, owner of South Valley Drywall, rode out the downturn after the housing crash in part by relying on commercial construction projects. He cut his residential construction staff from 244 in 2006 to 80 in 2009.
This year, Vap has hired 15 field employees for residential construction and says he needs to hire 35 more to do the work he foresees in 2013.
During the 2005-2006 housing boom years, Gupta had to bring in workers from Texas because there weren’t enough employees in Florida to keep up with construction. He doubts many of those veterans will return.
“A lot of people who are from other states or from Mexico are not willing to come back here as fast as they did last time because of what they experienced,” Gupta says.
Between 2005 and 2010, 1.4 million Mexicans moved from the United States to Mexico – roughly twice as many as in the previous five-year period, according to the Pew Research Center. Though an estimated 11 million people remain in the United States illegally, the influx of illegal immigration from Mexico has essentially stopped, says Douglas Massey, a professor of sociology at Princeton University.
“The Mexican economy is doing quite well, with strong growth in manufacturing and both skilled and unskilled services,” Massey notes. “If construction demand picks up, we may see an uptick in Mexican immigration, but I think the boom years are likely over.”
Crowe and other economists predict that as demand for new homes strengthens further, higher wages will woo back many laborers who took up other jobs during the downturn.
The homebuilders association is pushing Congress to let more immigrants enter the country through a worker visa program. The association cites census data showing that foreign-born workers make up about 22 percent of the U.S. home construction work force. It estimates there are 116,000 unfilled jobs.
Still, even if builders find more workers to hire, two other factors could hold back the industry for a while: A tight supply of building materials and ready-to-build land. Surveys by the National Association of Home Builders show that builders have grown concerned about those obstacles.
In part, that’s why Crowe thinks employment in single-family home building won’t return to its 2002 total until 2016. And he isn’t unhappy about that.
“In a perverse sort of way, the mild housing recovery is probably a good thing,” Crowe says. “We need to rebuild the infrastructure of the industry.”
Builders would be starting work on more homes – and contributing more to the economy – if they could fill more job openings.
In the meantime, workers in the right locations with the right skills are commanding higher pay.
Consider Richard Vap, who owns a drywall installation company. The resurgent housing market has sent builders calling again. Vap would love to help – if he could hire enough qualified people.
“There is a shortage of manpower,” says Vap, owner of South Valley Drywall in Littleton, Colo. “We’re probably only hiring about 75 or 80 percent of what we actually need.”
The shortage of labor ranges across occupations – from construction superintendents and purchasing agents to painters, cabinet makers and drywall installers. The National Association of Home Builders says its members have complained of too few framers, roofers, plumbers and carpenters. The shortage is most acute in areas where demand for new homes has recovered fastest, notably in Arizona, California, Texas, Colorado and Florida.
The problem results largely from an exodus of workers from the industry after the housing bubble burst. Experienced construction workers lost jobs. And many found new work – in commercial building or in booming and sometimes higher-paying industries like mining and natural gas drilling – and aren’t eager to come back.
Hispanic immigrants, largely from Mexico who had filled jobs during the boom, were among those who left the industry and, in some cases, the United States.
Dave Erickson, president of Greyhawk Homes in Columbus, Ga., lost an employee who took a job this year in Texas. The former employee is now installing fiber-optic cable and earning 30 percent more than he did as a construction supervisor.
“I think he’s frustrated with the cycle we went through in recent years,” Erickson says.
A shortage of labor in a well-paying industry might seem incongruous in an economy stuck with a still-high 7.5 percent unemployment rate. But it reflects just how many former skilled construction workers have moved on to other fields.
In 2006, when the boom peaked, 3.4 million people worked in homebuilding. By 2011, the figure had bottomed at about 2 million. As of last month, about 2.1 million people were employed in residential construction.
Jobs in the industry did rise 4.1 percent in April from a year earlier, faster than overall U.S. job growth. But they’d have to surge 24 percent more to reach 2.6 million, their 2002 level – “the last time the market was normal,” says David Crowe, chief economist for the National Association of Home Builders.
For now, the industry is building faster than it’s hiring. In February, builders began work on single-family homes at the fastest pace in five years. And in March, new home construction broke the 1 million mark for the first time since June 2008. Permits for future construction are also near a five-year high.
In the 12 months that ended in March, housing starts surged 47 percent. Yet over the same period, the industry’s employment grew just 3.7 percent.
Normally, a rebound in home construction helps propel an economy after a recession. But even with the steady gains in housing starts, sales and prices since last year, the industry remains below levels considered healthy.
The National Association of Home Builders says nearly half its members who responded to a survey in March said a scarcity of labor has led to delays in completing work. Fifteen percent have had to turn down some projects.
“I can’t find qualified people to fill the positions that I have open,” says Vishaal Gupta, president of Park Square Homes in Orlando, Fla. If not for the labor shortage, “I would be able to build more homes this year and meet more demand than I can handle today.”
Gupta’s company is facing a side effect of the labor shortage: Demand for higher pay from qualified workers. On some occasions, he says he’s been outbid by rivals that need contractors for their own projects. Gupta’s preferred paint contractor left for a rival that paid more. His new cabinet contractor is about 10 percent more expensive than the one Gupta used before.
The higher pay they’re handing out helps explain why builders have been gradually raising prices on new homes. The median price was $247,000 in March, up about 12 percent from the same month in 2011, the Commerce Department says.
The industry may have to look more aggressively for workers at vocational schools, federally funded programs like Job Corps and elsewhere, says Crowe of the homebuilders group.
“We’ll have to recruit more,” he says.
Vap, owner of South Valley Drywall, rode out the downturn after the housing crash in part by relying on commercial construction projects. He cut his residential construction staff from 244 in 2006 to 80 in 2009.
This year, Vap has hired 15 field employees for residential construction and says he needs to hire 35 more to do the work he foresees in 2013.
During the 2005-2006 housing boom years, Gupta had to bring in workers from Texas because there weren’t enough employees in Florida to keep up with construction. He doubts many of those veterans will return.
“A lot of people who are from other states or from Mexico are not willing to come back here as fast as they did last time because of what they experienced,” Gupta says.
Between 2005 and 2010, 1.4 million Mexicans moved from the United States to Mexico – roughly twice as many as in the previous five-year period, according to the Pew Research Center. Though an estimated 11 million people remain in the United States illegally, the influx of illegal immigration from Mexico has essentially stopped, says Douglas Massey, a professor of sociology at Princeton University.
“The Mexican economy is doing quite well, with strong growth in manufacturing and both skilled and unskilled services,” Massey notes. “If construction demand picks up, we may see an uptick in Mexican immigration, but I think the boom years are likely over.”
Crowe and other economists predict that as demand for new homes strengthens further, higher wages will woo back many laborers who took up other jobs during the downturn.
The homebuilders association is pushing Congress to let more immigrants enter the country through a worker visa program. The association cites census data showing that foreign-born workers make up about 22 percent of the U.S. home construction work force. It estimates there are 116,000 unfilled jobs.
Still, even if builders find more workers to hire, two other factors could hold back the industry for a while: A tight supply of building materials and ready-to-build land. Surveys by the National Association of Home Builders show that builders have grown concerned about those obstacles.
In part, that’s why Crowe thinks employment in single-family home building won’t return to its 2002 total until 2016. And he isn’t unhappy about that.
“In a perverse sort of way, the mild housing recovery is probably a good thing,” Crowe says. “We need to rebuild the infrastructure of the industry.”
Source: Associated Press 2013
Forecast Improves for 2013 Economy
Political paralysis in Washington won’t stall an economic recovery that’s revving up across the rest of the country. That’s the consensus of economists surveyed by USA Today, who predict the recovery will accelerate late this year even without a deal by Congress and the White House to lessen the impact of automatic federal budget cuts.
The across-the-board spending cuts will cause growth to slow in the middle of 2013. But the negative effects will ease by the fourth quarter as the private sector gathers strength, according to the 43 leading economists surveyed May 6-9.
This year, the budget cuts are expected to pare federal spending by $65 billion and shave half a percentage point off economic growth, according to the Congressional Budget Office (CBO) and Moody’s Analytics.
The economy expanded at a 2.5 percent annual rate in the first quarter. Economists’ median estimates project growth is likely to average about 2 percent annually this quarter and next.
Monthly job growth, which averaged 206,000 in the first quarter, will average 165,000 in the second quarter and 172,000 in the third quarter, the economists say.
Many top economists, including Federal Reserve Chairman Ben Bernanke, have urged delaying much of the belt-tightening until the economy is on more solid footing. While the White House and a divided Congress are making little progress in talks, more than two-thirds of the economists surveyed say it’s unlikely even the fiscal 2014 budget cutbacks will be tempered.
An additional $40 billion in cuts next year will reduce 2014 economic growth by 0.3 percentage points, the CBO and Moody’s say. Even so, the economists expect growth to pick up in the fourth quarter and approach 3 percent by early next year as job gains climb to a 200,000 monthly average.
Since the job market hit bottom in early 2010, the economy has grown about 2 percent annually and monthly job growth has averaged 162,000.
“There are some powerful positive forces to offset” budget cuts, says Jim O’Sullivan, chief U.S. economist of High Frequency Economics.
The Fed’s bond-buying initiative, he says, has held down long-term interest rates, juicing housing and driving up stock markets.
Housing starts are likely to total 990,000 this year and about 1.2 million in 2014, according to Standard & Poor’s, up from 780,000 in 2012.
O’Sullivan says higher home and stock prices are making consumers feel wealthier, so they’ll spend more. Continued job gains, he says, will further bolster spending.
Wells Fargo economist Mark Vitner says the stock market rally has mostly benefited the wealthy while wage gains for average Americans have languished: “We’re getting a recovery. It’s just a slow recovery.”
The across-the-board spending cuts will cause growth to slow in the middle of 2013. But the negative effects will ease by the fourth quarter as the private sector gathers strength, according to the 43 leading economists surveyed May 6-9.
This year, the budget cuts are expected to pare federal spending by $65 billion and shave half a percentage point off economic growth, according to the Congressional Budget Office (CBO) and Moody’s Analytics.
The economy expanded at a 2.5 percent annual rate in the first quarter. Economists’ median estimates project growth is likely to average about 2 percent annually this quarter and next.
Monthly job growth, which averaged 206,000 in the first quarter, will average 165,000 in the second quarter and 172,000 in the third quarter, the economists say.
Many top economists, including Federal Reserve Chairman Ben Bernanke, have urged delaying much of the belt-tightening until the economy is on more solid footing. While the White House and a divided Congress are making little progress in talks, more than two-thirds of the economists surveyed say it’s unlikely even the fiscal 2014 budget cutbacks will be tempered.
An additional $40 billion in cuts next year will reduce 2014 economic growth by 0.3 percentage points, the CBO and Moody’s say. Even so, the economists expect growth to pick up in the fourth quarter and approach 3 percent by early next year as job gains climb to a 200,000 monthly average.
Since the job market hit bottom in early 2010, the economy has grown about 2 percent annually and monthly job growth has averaged 162,000.
“There are some powerful positive forces to offset” budget cuts, says Jim O’Sullivan, chief U.S. economist of High Frequency Economics.
The Fed’s bond-buying initiative, he says, has held down long-term interest rates, juicing housing and driving up stock markets.
Housing starts are likely to total 990,000 this year and about 1.2 million in 2014, according to Standard & Poor’s, up from 780,000 in 2012.
O’Sullivan says higher home and stock prices are making consumers feel wealthier, so they’ll spend more. Continued job gains, he says, will further bolster spending.
Wells Fargo economist Mark Vitner says the stock market rally has mostly benefited the wealthy while wage gains for average Americans have languished: “We’re getting a recovery. It’s just a slow recovery.”
Source: USA Today 2013
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