South Florida Real Estate and The Economy: The Coronavirus Disruptor
Thu Mar 5, 2020 by Oppenheim Law on Florida Real Estate
While we have blogged about the overall effects of the Coronavirus on the South Florida real estate market, the Federal Reserve made an emergency rate cut. Most recently there was the unprecedented close of Washington state schools amid coronavirus fears.
While it is easy to succumb to fear due to this virus and its impact on not only real estate but the entire economy, there have been reports that our economy before the Coronavirus was sluggish at best despite the roller coaster ride of the stock market. In fact, business investment fell in the last three quarters in 2019, which would forecast reductions in capital spending.
A New Recession In Florida?
Economic comparisons may be made to the Great Recession. For all of you who have known me for the past decade or so also know that we at Oppenheim Law were literally at ground zero when the Great Recession hit in 2008 and when the foreclosure crisis severely impacted our community.
Unfortunately, with the fears growing daily about the Coronavirus we are starting to recognize several similarities in how the economy is reacting to this literally exogenous threat that seemingly came out of nowhere. I can recall that prior to the economic crisis of 2008, the economy was humming at a very strong pace, the stock market was doing well, and there was an enormous amount of both business and consumer optimism. Of course, we all know what happened: the banks stopped lending and people stopped consuming, and employers started laying off people. Commercial activity slowed down to a crawl and, with that, many of us lost our jobs, and, in some cases, lost our health insurance and even lost our homes.
The situation with the potential Coronavirus pandemic is perhaps more serious in that not only are we going to see a substantial decline in overall economic activity, but we are also dealing with trying to make sure that our loved ones and that ourselves remain healthy and strong.
We’re In This With You
So as this particular crisis continues to unfold, we at Oppenheim Law will again position ourselves to remain at ground zero and provide necessary services to help our friends, family, and clients be able to deal with whatever legal issues arise whether individuals fall behind on their mortgages, student loan debt and/or credit card debt. People unfortunately may have major issues with medical providers where there is no or inadequate insurance to provide for the medical services that they or their loved ones need during this new crisis.
Travel Being Impacted
We further are seeing that many people who were planning various excursions, trips and cruises will decide to not travel, and must file insurance claims with insurance companies if they bought trip cancellation insurance. Filing these claims is usually not as simple as it looks and if one makes one wrong step, the insurance company will not pay the claim or, in some instances, delay paying the claim due to the overwhelming number of claims filed.
With huge events being canceled or postponed like Ultra and film schedules being delayed from spring to fall like the latest James Bond movie No Time To Die and major trade conferences being cancelled, there will be a huge economic dislocation. With that said legal and business issues will have to be resolved to determine who is responsible for the cancellation fees. For example, if you were a major vendor at South by Southwest like Facebook, and decide not to attend, what happens?
Another example is if you paid for your Ultra Music Festival tickets, will Ultra be able to refund your tickets or will Ultra ultimately go the way of Fyre, the exclusive bohemian event that never was.
What Will Happen To Businesses?
In many cases, individuals and small and mid- sized businesses may have to contemplate the filing for bankruptcy if they are involved in a business that relies heavily on getting goods, supplies, and/or component parts from China or in the alternative if they are in a business that heavily relies on tourism and that tourism demand dramatically drops off due to people’s decisions to stay closer to home. This, then, influences the taxi, Uber, and Lyft drivers if people are traveling only for necessity and not leisure.
Another situation we anticipate is that more companies and businesses will combine and join forces in order to stay viable, especially those businesses who manufacture in affected regions.
And, many individuals may consider this virus outbreak as a reminder that it is a good time for them to review their estate planning needs.
While no one is suggesting that the Coronavirus outbreak is going to literally be some sort of existential threat to humanity, it is fair to state that it will be exceptionally disruptive, maybe more disruptive than the Great Recession of ten to twelve years ago.
The silver lining is this: We are all fighters and survivors and time tested through the last economic crisis. Eventually, once the outbreak recedes, there will be tremendous business opportunities born out of this crisis. In the interim, our firm will be providing various online seminars on numerous topics that will be of tremendous service to you and your family as you attempt to navigate these tumultuous waters in the next few weeks and months.
So, keep checking with us and in the meantime follow the recommendation of the CDC. While the CDC has never explicitly expressed it, we believe its prudent advice to wash your hands before and after using the restroom.
From the Trenches,
Thanks for the great insights