While the US as a whole has failed to fulfil expectations this year, the Florida economy has surged ahead both in economic growth and job creation. Analysts believe this tendency is set to continue throughout 2017, an opinion reflected in the very positive potential seen by local businesses in Florida.
The latest figures for the economy in the US disappointed analysts who had predicted higher growth. This situation does not apply, however, in Florida, a state where all data lies ahead of the national average and in some metropolitan areas, by a long way.
Florida economy grows faster
One sure sign of the gap between Florida and the US lies in figures for economic growth last year. The US saw its GDP expand by 2.4 per cent, considerably higher than many countries in 2015, but nearly 20 per cent below the growth registered by the Florida economy.
GDP in the Sunshine State last year registered an increase of 3.1 per cent when the Florida economy added US$789.8 billion in growth. A total of 15 out the 22 metropolitan statistical areas (MSA) in Florida saw even greater expansion.
Leading economic growth was Punta Gorda whose GDP went up by 5.8 per cent in 2015. Hot on its heels was the MSA of Cape Coral-Fort Myers with an increase of 5.3 per cent. Other star performers in the Florida economy ranking was North Port-Sarasota-Bradenton with a 4.1 per cent increase.
Florida job creation booms
A major factor behind the boost in the Florida economy comes from the state’s buoyant job market. In September, Florida added 18,000 private sector jobs, an increase of 4 per cent on the same month last year. In contrast, the US as a whole created 154,000 jobs in the month, almost 10 per cent fewer than September last year.
Unemployment in Florida fell to 4.7 per cent in August, another figure that is better than the national average (4.9 per cent). Analysts expect the strong Florida economy to continue to create more jobs as the year ends. In a survey carried out by PNC, a financial services company, 22 per cent of small and medium businesses in the state claimed that they will be hiring more workers this autumn. The jobless rate in Florida is currently at its lowest since the recession.
The PNC survey also reported an uptick in optimism around Florida businesses. 78 per cent of small and medium companies interviewed said that they felt optimistic about the Florida economy. This is a significant jump from the 65 per cent registered in the spring survey. It’s also higher than national sentiment – 71 per cent of American businesses stated their outlook for the US economy as optimistic.
Hand-in-hand with strong job creation and economic growth comes a rise in consumer confidence. The September survey carried out by the University of Florida showed an increase of 2.8 points in the index with a rise in four out of five of the components making up the index. Particularly significant was the increase in perception of personal financial situation, up 3.2 points since last year.
Effects on the Florida property market
Better personal finances buoyed up by improved job opportunities are putting pressure on the Florida property market. House prices in Florida increased ahead of the national rate in the latest S&P Case Schiller Index (July). Over the year, US property rose by 5.1 per cent while median prices for single family homes in Florida went up by a massive 11.6 per cent and townhouse-condo properties by 8.6 per cent.
When it comes to peak prices, Florida property still lies considerably below their historic high. Prices for property in US in general now stand at just 0.6 per cent below their record high set in July 2006. The Sunshine State, however, still has considerable way to go before it reaches prices last seen in December 2006. In South Florida, for example, house prices remain 23 per cent below the peak seen a decade ago.
Inventory throughout the US remains low. According to the National Association of Realtors, property supply has decreased for 15 consecutive months and without new home construction, particularly single family homes, this situation is set to continue. This piles pressure on the property market for both resales and rentals.
“The Florida economy has experienced a remarkable recovery over the last few years,” says Dies Poppeliers, Managing Director of BRIC Group. “And the good news for property investors is that this economic dynamism shows no sign of faltering meaning there’s no shortage of home buyers or renters.”
BRIC Group, an investment company specialising in global real estate opportunities, offers US real estate investments including turnkey properties in Florida and Houston, and land plots in Florida. BRIC Group is also developing The Coral resort, in Northeast Brazil, a luxury beachfront resort with land and villa investment opportunities. BRIC Group has been creating wealth for its clients since 1996 and has offices in Brazil, Dubai (consulting office), Hungary, Spain and the US.
(Sources: Florida Realtors, National Association of Realtors, Sun Sentinel, PNE, S&P Case-Schiller Index)
