Transcript Document

Florida Entered the New Year with Strong Economic Momentum:
A Positive Environment for South Florida Real Estate
Tony Villamil
Economic Outlook: It’s the Economy!
Get Smart on What to Expect in 2015
January 28, 2015
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Economic Drivers and Long-Term Fundamentals of South Florida*
are Mostly Positive for 2015 and Beyond
US Economic Activity/
Financial Indicators
Global Economic Performance
Florida Business Climate
West Palm Beach
Broward
Miami-Dade
South Florida
Fundamentals
*Comprised of Miami-Dade, Broward and Palm Beach Counties.
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Florida “Operating on All Cylinders” as we Enter 2015:
US and Global Economies, Together with State Business Climate,
are Key Drivers of South Florida
Economic Driver
Outlook 2015
US Economy
Economy growing at 3% plus this year: Positive
for key industries of Florida and South Florida
such as Wholesale Trade, Construction, Retail,
Tourism, Professional Services and
Manufacturing
Global Economy
A mixed performance continuing in 2015. Euro
Zone slow growth. Canada, Asia and most of
Latin America countries experiencing moderate
growth
Florida Business Climate
Pro-growth Governor and Legislature. Election
results solidify top business climate. Low and
stable taxes, positive fiscal situation, aggressive
recruitment, retention and expansion of
companies by Governor/EFI
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US Financial Indicators:
Positive for South Florida in 2015
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Household Net Worth:
Positive for Consumer Spending Increasing in 2015
$90
$85
$79
$80
$80
$81
$81
$75
$70
$ Trillion
$70
$65
$60
$63
$57
$58
2008
2009
$64
Up
$24 Trillion
Since ‘08
$55
$50
$45
$40
2010
2011
2012
2013
2014-Q1
2014-Q2
2014-Q3
Source: Federal Reserve Bank, Flow of Funds Accounts, Flows and Outstandings, 3Q-2014 (Dec 11, 2014).
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US Non-Financial Debt:
Households Borrowing Prudently, Business Debt Growing
Years
Households
Business
State & Local
Governments
Federal
Financial and Housing “Bubbles”
2005
2006
2007
11.2
9.7
6.7
9.0
10.9
13.6
5.8
3.9
5.5
7.0
3.9
4.9
The “Great Recession” and the Aftermath
2008
2009
2010
2011
2012
2013
-0.2
-1.7
-2.6
-1.5
0.2
1.5
6.3
-2.3
1.5
4.7
6.0
5.1
0.6
4.0
2.3
-1.7
-0.2
-1.3
24.2
22.7
20.2
11.4
10.9
6.5
2014:Q1
2014:Q2
2014:Q3
2.3
3.4
2.7
6.0
5.0
5.2
-1.3
1.2
-2.8
6.0
2.5
7.2
Keynes
Lives!
Source: Federal Reserve Bank, Flow of Funds Accounts, Flows and Outstandings, 3Q-2014 (Dec 11, 2014).
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Monetary Base: Record Breaking Growth:
Exit Strategy of FED Keeps Me “Awake in Miami!”
$4,500
$4,000
$ Billions
$3,500
$3,000
$2,500
$2,000
Ample
Liquidity
$1,500
$1,000
$500
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Source: Federal Reserve Bank of St. Louis Economic Research. Jan 2002-Dec 2014. Shaded areas indicate US Recessions.
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Velocity of M2 Money Stock: Opportunity Cost of Holding Money is Very Low
𝑴 ∙ 𝑽 ≡ 𝑷 ∙ 𝑸!
2.1
2.0
Ratio
1.9
1.8
1.7
1.6
1.5
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Source: Federal Reserve Bank of St. Louis Economic Research. Q1:2002-Q3:2014. Shaded areas indicate US recessions.
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US Economic Activity Likely to Gain Moderate Momentum in 2015:
A Positive Development for South Florida Real Estate Industries
US Real GDP Growth
(Annual Average)
3.0%
2.5%
2.0%
"Great Recession"
3.0%
2.0%
1.0%
0.0%
-1.0%
-2.0%
-3.0%
-3.5%
-4.0%
2009
2013
2014E
2015F
Sources: BEA and The Washington Economics Group, Inc. (WEG) for Estimate (E) and Forecast (F).
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Global Economy Continues to Underperform Again in 2015:
But There are Significant Country Differences
World Output Growth
(Annual Average)
4.0%
3.5%
3.0%
3.3%
3.3%
2013E
2014E
3.5%
2.5%
2.0%
1.5%
"Great Recession"
1.0%
0.5%
0.0%
-0.5%
-1.0%
-1.0%
-1.5%
2009
2015F
Source: International Monetary Fund, World Economic Outlook, January 20, 2015 Revision.
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Top Business Climate, Low-Interest Rates and
Declining Energy Prices are Propelling Florida and
South Florida to Another Strong Economic Year
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Florida’s Real GDP Growing Faster than National Average:
State Likely to Grow Faster than Texas this Year!
Florida’s Real GDP Growth
(Annual Average)
4.0%
3.0%
2.0%
3.1%
"Great Recession"
3.5%
2.2%
1.0%
0.0%
-1.0%
-2.0%
-3.0%
-4.0%
-5.0%
-5.0%
-6.0%
2009
2013
2014E
2015F
Sources: Bureau of Economic Analysis and The Washington Economics Group, Inc. (WEG) for Estimate (E) and Forecast (F).
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Economic Activity Accelerated in South Florida
During 2014:
Additional Gains Expected this Year
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South Florida Payroll Employment Growth Rose Strongly in 2014:
Continued Solid Growth Expected this Year in a Variety of Industries
Over the Year
Change
Over the Year
% Change
2,487,200
+72,800
3.0%
2,105,500
2,177,200
+71,700
3.4%
Trade, Transportation & Utilities
575,500
590,600
+15,100
2.6%
Professional & Business Services
378,700
396,700
+18,000
5.0%
Education & Health Services
352,700
363,100
+10,400
3.0%
Leisure & Hospitality
293,400
301,700
+8,300
3.0%
Financial Activities
167,300
172,700
+5,400
3.2%
97,200
104,900
+7,700
8.0%
Category
Total Payroll Employment
Total Private
Construction
Dec 2013
Employment
Dec 2014
Employment
2,414,400
Source: DEO, FREIDA, December 2014 Current Employment *Comprised of Miami-Dade, Broward and Palm Beach Counties.
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South Florida* Housing Activity Consistent with Steady Growth:
Preferably to “Boom and Bust”
Housing Indicators
2012
2013
2014
Housing Starts
11,477
17,225
21,311
Single-Family Home Sales
39,232
42,501
44,903
$202,200
$250,000
$265,000
46,754
48,406
46,317
$103,000
$129,000
$145,000
Single-Family Homes (Months Supply Inventory)
4.9
4.9
5.4
Multifamily Homes (Months Supply Inventory)
5.4
5.9
6.8
Median Single-Family Home Price ($)
Multifamily Home Sales
Multifamily Median Home Price ($)
Sources: Florida Realtors and US Census Bureau. *Comprised of Miami-Dade, Broward and Palm Beach Counties.
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Long-Term Fundamentals of South Florida Remain Strong
for 2015 and Beyond: Strengthening the Cyclical Upturn
 Global “Brand” positive for expansion of key South Florida industries
 Corporate relocations and growing technology hub of State
 Higher education cluster
 MIA/Fort Lauderdale airports
 Port of Miami post Panama ships
Strong Fundamentals Strengthen the Outlook for
A Strong 2015 Economic Year
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“Bottom Line” 2015

Florida likely to outperform National economy again this year

Top performing State among “The Big Four”

South Florida has become a leading region of Florida

Continued low-interest rates, declining energy prices and pro-growth State, add to
the fundamental strengths of Florida and South Florida

Downside risks to monitor:

FED Policy

Euro Zone and Japan “malaise”

Middle East

The “Executive Order” WH
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Happy Business Hunting, with Moderation!
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Visit us at:
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Twitter: @tonyvillamil
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