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Port Charlotte and Punta Gorda Homes Sales

By James Mulligan (941-456-3034) Licensed Real Estate Broker
Selling and Buying Homes and Condos in Punta Gorda Isles, FL February 22, 2007

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Homes For Sale In Punta Gorda, Florida

Economist: Housing’s long-term outlook good

By BOB FLISS CHARLOTTE BUSINESS EDITOR

Charlotte Sun-Herald Newspaper. Reprinted with permission.

Feb 22, 2007

Although the housing market will probably remain confused for some time, longterm factors driving the Southwest Florida economy remain remarkably strong, according to the chief economist for Sun-Trust Banks.

“Previously, the Florida housing market was driven by retirees. That does not mean that we’re driving retirees away ... but people are coming down here looking to go to work,” said Gregory Miller, speaking Wednesday at a luncheon meeting of local business leaders at the Isles Yacht Club in Punta Gorda.

The U.S. population is growing roughly 1 percent a year. Southwest Florida is gaining 3 to 4 percent. And the area’s labor force is actually growing faster than the population, a remarkable 5 to 6 percent a year, Miller said.

Miller is based at the SunTrust headquarters in Atlanta. A Miami native and Florida State University graduate, he served on the economic staffs for governors Reubin Askew and Bob Graham before entering the banking industry. He said that his role for Sun-Trust involves watching the Federal Reserve and forecasting changes in interest rates.

Clearly, whatever problems Florida is having from high taxes and a glut of overpriced housing aren’t cutting into the long-term appeal of life in paradise.

Miller notes that Florida is still perceived as a place of economic opportunity, and shares this distinction with nearly all of the Southeastern states.

By comparison, in California “the skilled labor force is leaving like rats from a sinking ship.”

Different as they are, California and Florida share the problem of overpriced real estate. Miller said that a recent survey of “overpriced” housing markets concluded that 13 of the 50 worst were in Florida, with 20 in California.

Miller estimates that homebuilding activity in 2006 dropped about 35 percent compared with about 11 percent nationally.

The Florida housing market has a “composition problem,” Miller said. In other words, it’s not providing what consumers actually need. Affordable housing for working families is scarce, while higher-priced dwellings wait on the market month after month.

In Charlotte County “what you need is fewer houses near the water and more east of I-75,” Miller said. He predicted that the market will eventually correct itself, but this will take some time. It’s probably a mistake to believe that the market has bottomed out — growth probably won’t resume until 2008.

In the short run, look for 2007 to be a relatively slack year economically, especially as the housing market still needs a serious price correction.

Miller explained that economists have coined the term “soft landing” for periods when the economy is slowing but isn’t actually in a recession. “Soft landing” conditions may persist for all of 2007 before vigorous expansion returns.

The idea of a “soft landing” is important to today’s diversified economy, which is no longer prone to shift into reverse when a single important industry gets a shock.

Miller added that the unexpectedly brisk 2006 fourth quarter — 3.5 percent growth in gross domestic product — doesn’t look so great on closer examination.

Once you factor out the welcome decline in oil prices, fourth-quarter growth looks more like 2 percent.

“It was a dramatic reversal in the price of oil and consumers ended up with extra jingle in their pockets,” Miller said. And they went on a spending spree, mainly for nondurable goods such as clothing.

Meanwhile, the decline in oil prices also eased the national trade imbalance, because petroleum represents a large share of U.S. imports. Miller noted that both imports and exports have been growing at doubledigit rates.

Also, defense spending on the war in Iraq accelerated more than 10 percent in the 2006 final quarter. Miller said this rate of growth is likely to taper off in 2007.

For consumers, the future holds as many negatives as positives, Miller said. With national unemployment less than 5 percent, the economy could be said to have achieved the theoretical status of “full employment” — the exact number for which is something of a moving target, depending on the condition of the labor force. He added that some of the strongest employment growth today is in fields that require considerable training — lawyers, accountants and information technology specialists, for example. These professionals can’t be trained or replaced overnight.

But consumers are also indebted to the point where a severe shock to the economy could hurt.

Interestingly, although housing sales are down in practically every state, foreclosure activity is much greater in the Midwest than the Southeast and Florida.

Looking deep into the national economic numbers, probably the most worrisome trend is that business capital spending — on new facilities and equipment — closed the year at only about 11 percent of GDP. Miller explained that this figure is “volatile, but it’s the catalyst, it’s what starts the rest of the economy growing.”

Also, inventories looked high at about $50 billion. Slow capital investment and high inventories suggest that “when businesses begin to pull back on capital investment it probably reflects something systemic, because these businesses are all looking at the same numbers at the same time,” Miller said.

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Homes in Charlotte County, including Punta Gorda and Port Charlotte are still a great value. Call Jim of search our website for homes in our area. Click the link below to search the MLS.

James B. Mulligan, Licensed Real Estate Broker

18245 Paulson Dr.

Port Charlotte, FL 33954

Jim Mulligan (941) 456-3034

Andy Leonard (941) 662-0033

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