There’s been a lot of unrealistic conjecture about the Florida real estate market . The reality is that the highly educated residents of Tampa may wind up better off down the line than anyone can forecast now. Still, the present indicates an overvalued market and a high unemployment rate. This article seeks to explore in detail the present and future of the Tampa real estate market.
According to the Bureau of Labor Statistics, unemployment in Tampa was 12.3%, which is slightly higher than the 11.8% reported for the state of Florida. This is a contradiction of the information gathered by The New York Times, which reported in its article “The Jobless Rate for People Like You,” that the unemployment rate for all women and men with a bachelor’s degree or higher was 4.5%. The American Community Survey in 2007 discovered that 31% of those living in Tampa have a college degree or higher. So why the high unemployment rate? One can only guess that many of the jobs lost were hospitality jobs, because the hospitality industry has been hard-hit by the recession. Florida received a mere 29,321 stimulus jobs, which is low when one considers the high unemployment rate as well as the high rate of foreclosure in the state. It will be interesting to see how Florida’s economy seeks to develop beyond the hospitality sector as the recession continues.
According to CNNMoney.com, Florida has one of the highest foreclosure rates in the nation, at 18.81%. In 2009, 14 banks failed in the state of Florida One of the most worrisome things is that homes in Florida are considered to be overvalued by as much as 33.7%, according to MSNMoney.com. What makes Florida’s real estate market different than, say the real estate market in California, is that it seems as though no neighborhood has been differentiated or spared from the overvalued market or rate of foreclosure. While Brentwood and Beverly Hills in Los Angeles persistas strong markets, no suburb of Tampa seems to be doing any better than another.
One of the reasons for this has to do with the high rate of foreclosure, and what’s been termed by the media the “shadow inventory” being held onto by banks. This shadow inventory is an aggregation of foreclosures that banks are hanging onto, hoping that the real estate market will improve to the point where the banks can recover a greater portion of their investment in the resale. Eventually the banks won’t be able to hold out on the inventory, and the market will once again be engulfed with foreclosures.
Another troubling issue looming on the horizon has to do with option adjustable rate mortgages, or option arm mortages. These are loans in which the lendee only needs to repay a portion of the interest. In the meantime, the interest compounds on the principle until the new principle reaches a certain ceiling. Once that happens, the loan recasts and a new payment schedule is created that accurate reflects both the interest and the new principle. This balloon payment is often unaffordable to the person who has taken out the loan, and has for years only budgeted to repay a portion of the interest. Research has shown that as much as 88% of option arm mortgages made have yet to recast and reach their balloon payment.
However, on a more positive note, the Housing Opportunity Index reports that as much as 78.5% of mortgages made in Tampa during 2009 have been affordable to those taking out the loans. On a more positive note, as much as 78.5% of mortgages made in Tampa during 2009 have been affordable to those takin gout the loans, according to the Housing Opportunity Index, or HOI. The HOI was created by the National ASsociation of Home Builders and Wells Fargo to estimate the affordability of mortgages by region, and it takes into factor the amount a family can afford to spend on their mortgage and still be able to live comfortably. Today the HOI is higher than it has ever been since 1991.
So while the economy may continue to falter, in the end we shall recover powerfully and be the wiser for our experiences. Predatory lending should continue to be sharply curtailed, and the new workforce should be educated to meet the demands of the new creative and information-based industries being created. The housing market may never recover to the point of wild speculation that occurred before the recession, but it will recover nonetheless.
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Author: Lisa Brown is a Sales and Marketing Associate for Almost Home USA (Corporate Housing Tampa), a corporate housing company whose goal is to provide such excellent experiences that clients feel almost home.
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