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Thursday, August 31, 2006
The Housing Market Gives, The Housing Market Takes Away
Tell me if you know this person: He (or she) has a bigger bank account than most people you know, but he never stops spinning a sad tale of financial woe. His boss doesn’t pay him enough, the tenants in his rental property are a pain, the oil companies and insurers are ripping him off and the tax collector always has his hand out.
Of course, this affluent tightwad has never missed a meal (although he never leaves more than a 15 percent tip), he drives a new car (and he’ll gladly tell you how bad he beat up the dealer) and he takes posh vacations (only to return home with gripes about the chintzy exchange rate).
Sound familiar? I thought so. Anyway, looks like this brand of pessimistic penny-pincher was overrepresented in the University of Florida’s latest Consumer Confidence Index.
It shows Floridians’ opinions about the economy at their lowest point in 13 years — in spite of unemployment at near-record lows, housing values at near-record highs and historically low interest rates. The last time the Florida Consumer Confidence Index was this low, the Dow Jones Industrial Average was at 3,500 and Palm Beach County’s median home price was $117,300.
The survey’s director blames the precipitous decline on Florida’s flat-lining housing market. If his analysis is accurate, it shows just how profound the hangover from a speculative bubble can be — and how the deflated expectations can darken what seems to be a bright economic picture.
In its Aug. 24 edition, The Economist calls the housing boom “the biggest bubble in American history.” Check this BusinessWeek story for a slightly more optimistic analysis of what it calls the “housing recession.”
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