Jacksonville Economy Showed Hopeful Signs in 2010

31 12 2010
Economic Trends for 2010

Economic Trends for 2010

Jacksonville’s economy showed hopeful signs in 2010, but remained mired in real estate value losses and double-digit unemployment.

The result was a truly mixed picture showing some economic trends improving, while others continue patterns set in 2008 and 2009.

“We’re in a very slow recovery,” said Paul Mason, University of North Florida economist.

It could be years before unemployment returns to a new “normal” — and that new normal could be closer to 7 percent, rather than the previous 4 percent jobless rate, Mason said. And even accomplishing that could take four years of healthy growth at 5 percent or better, he said.

Unemployment sank but rose again in 2010, but always remaining at levels higher than 10 percent. Jacksonville’s recovery has been slower than the national average, because the local economy is more reliant on real estate and tourism to begin with, Mason said.

According to the Florida Association of Realtors and the Northeast Florida Association of Realtors, home and condominium sales rose mid-year — perhaps in response to bargain prices — but both fell again toward the end of the year.

Foreclosure filings and mailings mirrored 2009 and then fell late in 2010. According to data from real estate aggregator RealtyTrac and the Duval County Clerk of Court, that drop could have been because financial companies froze foreclosure proceedings in the light of evidence many had been processed improperly.

The story in new home construction has remained much the same since June 2008, when monthly starts fell below 500. After a tepid increase early in 2010, new home starts in the area fell below a monthly volume of 200 late in the year, according to data from the Northeast Florida Builders Association.

There was good news for the year’s first three quarters in commercial real estate: Inventories fell and vacancy percentages remained static. And although industrial real estate inventory rose, vacancies remained flat — about 12 percent.

A rosy spot amid the lackluster economic news was tourism. Hotel occupancies rose from 2009 according to data from Visit Jacksonville, and area tourism and the Florida Department of Revenue reported that tourism and recreation spending picked up in 2010 from low points at the end of 2009.

Monthly hotel and motel occupancy rates from February to November showed increases from the year before, according to Visit Jacksonville data: up by 7 percent in June and July, 6 percent in September and October, and 5 percent in March, May, June and November .

Business travel increased as did personal vacations as people, cooped up in 2009, hit the road in 2010, said Visit Jacksonville spokeswoman Lyndsay Rossman.

When it came to local spending, 2010 didn’t offer a lot to get excited about, according to the Florida Department of Revenue. Regional sales of automobiles and auto accessories remained on par with low levels set in 2009 and well below spending levels from 2002 to 2007.

Like auto sales, purchases of consumer durables — items such as home appliances and other goods expected to last at least several years — were much the same or slightly lower than sales in 2009, which themselves marked the lowest point of the decade for that indicator. Sales of products for shorter-term use remained flat and largely unchanged since 2008.

In overall economic activity, however, the Florida Department of Revenue noted, 2010 reflected a slight improvement over 2009 based on overall sales in all measured categories for the Jacksonville metro area.

Looking ahead to 2011, there may be more room to fall before the real estate market hits its bottom and rebounds. Stan Humphries, economist for Zillow, blogged last week that the bottom won’t come until the second or third quarter of 2011 and that home values will fall another 5 to 7 percent nationally.

Recent performance would suggest that the Jacksonville area will follow a similar trend.

“We’ll experience a very long, protracted bottom before home value appreciation returns to historically normal rates,” he wrote.

In 2010, Jacksonville area homes lost some $7.9 million in value to sagging market prices, according to Zillow.

Even so, that was slightly better than the $8 million in value lost the year before.

Source: Northeast Florida Association of Realtors, Florida-Times Union and Zillow.com

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