While the latest US Jobs data paints a bleak picture for the broader economy, local employment in Florida has been flourishing: Having experienced some of the highest unemployment rates in the country since 2008, Florida is now in line with national average. In April 2012 the unemployment rate was 8.3%, down from 8.6% in March and 10.2% a year earlier.
While the employment outlook is in line with national rates, housing has only just started to recover from the effects of the previous malaise. While the average home price is down some 30% nationally from peak, we are still buying properties for 30% of their peak value in prime locations. The housing market lags employment as it takes time for people to migrate to new areas, settle in and ultimately decide to buy a home.
Another good leading indicator for housing comes from the equities markets where US Homebuilders have posted some of the strongest sector gains this year. People are ordering and building new homes again for the first time since pre 2008 and many builders are seeing a return to profitability.
Prices in the underlying real estate have also started to move solidly off their January 2011 lows with the median price for Tampa condos up 13% over April 2011. Unlike the stocks which pay no dividends, single family rentals yield between 6-8% cash on cash in addition significant upside potential. Distressed sales offer an opportunity to buy at discount with short sales selling an average of 21% below the price of non-distressed properties.
One of the characteristics of real estate market is that it is slow to respond. It takes time for people to devise and implement real estate decisions. Hence while the market may lag these indicators it seems destined to predictably follow them.
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