Double dip disaster
Remember those summer days when double dip meant nothing more threatening than dripping chocolate ice cream on your white shirt. Not only may carefree summer days be in the past, but our economic recovery also seems like a thing of the past.
June 1 and 3 were both bad days for the country's financial recovery. Not only did the job growth numbers tank, so did the stock market. On June 1, Automatic Data Processing, one of the country's leading payroll companies, announced private sector jobs grew at a much slower pace than economists had been predicting.
On June 3, the Labor Department confirmed that only 54,000 jobs were created during the month of May, the smallest in almost a year, and that the unemployment rate was 9.1 percent, an increase from previous months. The jittery stock market closed down in the triple digit range the first day and just under the second.
In addition, on June 1 Standard & Poor's released their Case-Shiller Home Price Indices. The report concluded that the national home price index declined by 4.2 percent in the first quarter of 2011, after having fallen 2.6 percent in the fourth quarter of 2010.
The national index hit a new recession low with the first quarter's data and posted an annual decline of 5.1 percent, versus the first quarter of 2010. Nationally, home prices are back to their mid-2002 levels.
The report further concluded that the rebound in prices seen in 2009 and 2010 was largely due to the first-time buyer tax credit. If the result of this tax credit was removed from the national sales figures, it would result in virtually no recovery.
Further, while last year saw signs of an economic recovery, the most recent data do not point to renewed gains. According to S & P's report home prices continue to spiral downward with little or no relief in sight.
The other cloud hanging over the economic recovery is the fact that over 25 percent of all homes in the country with a mortgage are under water, that is they owe more than the current market value of the home. There are also indications that banks are not foreclosing on properties they have a legal right to foreclose on so they don't inflate their inventory of vacant homes.
These shadow properties could have a significant effect on values around the country if and when the banks do act. Unfortunately, in spite of significant government intervention in the form of tax credits and stimulus funds, it looks like the country is headed for a double dip recession at least in the housing market.
Thankfully, the Anna Maria real estate market has been showing significant signs of a strong recovery, and there are pockets around the country where this is also true, including Washington, D.C. which I found amusing.
However, it's important for us to be aware of what is happening in real estate markets in different areas of the country. Since Florida is and has always been populated with homeowners from out of state, if these potential buyers are stuck in their market, it will be difficult for them to move on regardless of great values available in the housing market.
The best we can wish for is that our local market continues to grow, fueled by buyers who have been sitting on the sidelines so long that the money is burning a hole in their pockets. Everyone wants a piece of paradise maybe now more than ever. Let's hope the only double dips in our future are at the top of a sugar cone.