Seacoast economist provides bleak outlook on economy

Bill Pittenger peppered the audience with numbers - many not so good - and lots of information in trying to look ahead as to what this year and beyond holds for the economy.

Pittenger, senior vice president and chief real estate economist at Seacoast National Bank, discussed the housing market and unemployment among other things during the Highlands County Homeowners Association meeting on Monday at the Sebring Country Estates Club House.

In Highlands County, the median home price was $169,000 in 2006 when the market peaked. The price dropped to $90,000 in December of last year.

Highlands is better off than some other areas in the state. St. Lucie County's median price fell 59 percent and it was 54 percent in the Melbourne area, according to Pittenger.

"You will not see it bounce back any time soon," he said of the market.

In terms of foreclosures, Highlands had 175 in December 2009 - one for every 316 households. Martin County recorded 374 in that month - one for every 203 households. St. Lucie had 1,172 foreclosures - one for every 113 households.

The state's unemployment rate is now 11.8 percent, which is the highest in decades. Pittenger said he expects it to exceed 12 percent before beginning to moderate.

Highlands' rate was 11.1 percent in December. That was lower than both Indian River and St. Lucie counties, where the percentage was more than 14.

"There are more people not working than the numbers show," Pittenger said. "It doesn't count independent contractors like Realtors.

"The scary part of this is the people who are dropping out of the labor force," he added.

A difference in the recession the country is coming out of compared to others is that during other recessions the job loss was cyclical.

"We do not see that as yet," he said.

As far as what needs to happen for recovery to occur, Pittenger said housing needs to return because how it impacts the broader economy.

Employment has to return to a normal level and projects must be economically feasible.

In the online newsletter Economic Perspectives, which is written by Pittenger, he said "the weakness in new construction stems from the absence of demand, declining values and the fact that new projects are not economically feasible. Most proposed projects if constructed today would be worth less than their cost to create."

He predicts that "it will likely be 2012 or beyond before wide scale residential or commercial development becomes feasible again."

Pittenger said people say to him if only banks would lend, the situation would improve. He noted that banks can't lend to the unemployed.

"There are not qualified borrowers," he said.