Friday, May 30, 2008

Florida: On The Brink

While people around the United States may be debating whether a recession is in full swing or not, the people of Florida would say it is. Florida has long relied on tourism as one of its chiefest industries, and that included the sale of vacation homes. Florida was one of the hottest areas during the housing bubble and many investors bought property there with subprime loans that came with high interest rates. When they reset, the home went into foreclosure.

Now, many houses are empty and inflation has caused other homeowners to have to stop paying maintenance fees to homeowners associations and condo organizations. With gas at nearly $4/gallon and climbing, many people are choosing “staycations” (where they stay put) instead of vacations, directly impacting the revenues going into the Florida economy. On top of that unemployment is up in the state. The increase in inflation and the loss of some income is resulting in people relying on credit or a cash advance to help make their monthly expenses.

Is There No End In Sight?

For the housing market, experts predict it will be several years before the backlog of available homes declines enough to bring prices back up. While this is a tremendous opportunity to buy a foreclosed home in Florida right now, there are still too many people struggling with the local economy to be able to do so at this time. One of the positive signs of a possible recovery that can later affect the sales of homes is that Florida's exports are rising very quickly. Even though there may be fewer people going to Florida during times when the price of gas is high, Florida started out the year 2008 with 3.4 percent increase in tourism during the off months even though unemployment was higher due to the loss of agricultural jobs. So, while the national trend is towards staying home and conserving gas, Florida's appeal still remains strong in the tourism market. If the trend continues during the coming summer months, it may be just what Florida needs to start bringing in more business and, thus, provide more seasonal employment for people living there in the food and entertainment industries.

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