Five years ago this month, the Great Recession began. Which leads to this question: How much longer until South Florida can erase the damage?
Officially, the recession ended in June 2009. According to the National Bureau of Economic Research, the national economy began contracting in December 2007 and did not grow again for 19 months. Using taxable sales figures, its probably safe to say South Florida experienced a longer downturn. Overall spending contracted for the first time in South Florida in March 2007 and didnt post a year-over-year gain until February 2010.
Miami was at the forefront of the housing boom and bust, said Karl Kuykendall, an economist who follows South Florida for IHS Global Insight. Its no surprise Miami was early into the recession and somewhat late coming out.
But whatever the actual duration of the downturn, it doesnt take much math to realize the economy still feels shaky. South Florida lost its first net job in more than two years in October, when a tiny decline of 300 payroll slots interrupted 26 months of consistent expansion. The upcoming November report out Friday will show whether the losing streak continues.
And while unemployment is off near-record highs set in April 2010, more than 180,000 South Floridians were listed as officially out of work in the last count. Thats almost 90 percent more than the 98,000 people listed as out of work in the first month of the recession.
Tourism posted an early recovery, particularly in Miami-Dade, where foreign visitors helped hotels shake-off a sharp drop in U.S. vacationers and business travelers. But the recession lingers in Browards tourism industry, which is just now retiring past records.
Housing suffered the most dramatic crash throughout the recession and was also the last of the major indicators to begin its recovery. The Case-Shiller real estate index pegs May 2006 as the peak of the bubble in South Florida. Although each neighborhood is different, the average South Florida house worth $200,000 that month would have fallen down to $97,600 by the time the market hit bottom just over a year ago, in November 2011.
Values have recovered 9 percent since then, meaning the same house should be worth just over $105,0000. Thats a loss of 47 percent over six years.
Recovering from that kind of crash takes time, and five years clearly isnt enough. To give a hint of the progress underway, Business Monday checked into businesses and residents on the frontlines of the recovery. The reports follow:
After fending off a foreclosure and battling to get out from under an onerous option ARM mortgage, Marie and Wilson Destin recently worked out a loan modification on their 4-bedroom, 2-bathroom house near Miami Lakes.
With the help of Neighborhood Housing Services of South Florida, a nonprofit agency that helps people navigate the Byzantine home financing landscape, the Destins cut their monthly mortgage payment to $1,500 from $1,900 under a new fixed-rate loan.
In 2006, when the housing market was booming, the Haitian-American couple had taken out an option ARM loan on the property, which they had owned for several years.
Somebody came to the house and approached me with an option ARM loan, said Wilson Destin. They said I would pay less.
The option ARM which has triggered financial woes for thousands of homeowners during the downturn allowed for flexible payments and negative amortization, practically encouraging people to defer payments.