ORLANDO, Fla. – June 29, 2016 – Spurred by rising job growth and home construction, Florida's economy is expected to continue to grow at a faster pace than the national forecast for the next four years, according to the latest forecast from UCF economist Sean Snaith, director for the Institute for Economic Competitiveness at the UCF College of Business Administration.
"The fundamental underpinnings of the housing market in Florida continue to strengthen. Job growth in Florida is forecasted to continue outperforming the U.S. labor market and more baby boomers continue to reach the end of their working lives," wrote Snaith in the second-quarter Florida & Metro Forecast. "This bodes well for continued population growth via the in-migration of workers and retirees."
From 2016-2019, Florida's economy, as measured by Real Gross State Product, is expected to expand at an average annual rate of 2.9 percent through 2019, outpacing the projected average for U.S. real Gross Domestic Product growth for the same period.
Nominal Gross State Product is expected to break the $1 trillion mark in 2018, according to the Florida & Metro Forecast, and climb to $1.074 trillion in 2019. That would make Florida's economy the 16th largest in the world, as ranked by the World Bank.
The pace of Florida's labor market recovery is expected to continue to exceed the recovery in the national job market through 2019. Labor-force growth will average 2 percent from 2016 to 2019 thanks to consistently robust job creation. Payroll job growth in Florida continues to outperform national job growth with year-over-year growth expected to average 3.9 percent in 2016, 2.4 percent in 2017, 1.1 percent in 2018 and 0.8 percent in 2019.
The improved outlook should entice more Floridians to seek employment while also attracting out-of-state job seekers, Snaith said. In addition, it should lift consumer sentiment and consumption spending.
However, Florida faces a growing single-family housing shortage due to the shrinking inventory of existing homes and a pace of housing starts that trails growth. The two trends are rapidly pushing prices up in the single-family market.
"While this looks like another housing bubble, it's really just an old-fashioned shortage in the single-family market," Snaith said. "It is expected to correct itself as new housing starts ramp up over the next few years."
Median existing home prices have reached $213,000 compared to $122,200 during the housing crisis. Yet while housing prices have increased, global property information company CoreLogic estimates 15 percent of Florida's mortgage holders are still underwater, meaning they owe more in mortgage debt than the value of the home. Florida is second only to Nevada (17.5 percent) in percentage of mortgage holders with negative equity.
© 2016 Florida Realtors®
Reprinted with permission. Florida Realtors®. All rights reserved.