The double dip makes its way to Florida in a new shape and size. Without miracle jobs numbers, the expiration of emergency benefits is leading to a double dip in the Florida housing market. Meager gains of the market will be washed out by the next tidal wave of foreclosures and only a surge in new construction can save us, predicts Oppenheim Law.
The housing market is in even more danger of a double dip considering emergency government benefits like extended unemployment and the payroll tax cut are scheduled to expire by the end of the year. The expiration of these benefits is expected to leave the most vulnerable Americans in a bind, unable to find jobs and with limited government assistance. Cuts like these will directly impact the economy at a time when it’s already extremely fragile. Money spent on benefits goes directly into the economy; resulting in two dollars of economic activity for every one dollar spent.
Hiring is the solution, but also the problem (especially in Florida)
The only remedy for less government benefits is an increase in hiring. But…the job market is dismal. Employers added only 18,000 jobs last month, with millions still unemployed.
The situation is even worse in South Florida, with above average unemployment in both Broward and Miami-Dade counties. While nationally, employers are adding miniscule amounts of jobs, Miami-Dade lost 3,500 jobs and Broward remained flat.
Oppenheim Law’s prediction
All of the cuts will result in more Floridians unable to stay in their homes. The more people unable to stay in their homes, the more foreclosures Florida will have. In addition to the foreclosures that will be caused by the benefit cuts; Oppenheim Law is still seeing a new tidal wave of foreclosures due to the restarting of the foreclosure process halted by the document mill scandal. Also, expect the previously dismissed “zombie” cases to rise from the dead.
The lull in foreclosures, as reported most recently by the Sun-Sentinel, is merely the eye of the storm. Oppenheim Law sees a tidal wave of foreclosures about to hit. The tides are already starting to rise.
The consequence of the greater numbers of foreclosures adds to the factors leading to a double dip and another fall in housing prices. The consequences will be exacerbated in Florida, one of the states worst hit by the housing crisis and also one of the largest recipients of federal benefit dollars.
Stay tuned for the next chapter in Florida real estate, Oppenheim Law says double dip, but what flavor and how long will it take to melt is the question.