Column: Is The Local Area Heading For Another Housing Bubble?
June 27, 2016
by Phyllis K. Pooley
Back in 2005, the National Association of Realtors produced the report “Home Price Analysis for Pensacola-Ferry Pass-Brent” in which the author found the local metropolitan housing market to be in “excellent shape” with potential for significant equity gains.
The report analyzed median mortgage servicing costs and median incomes ratio and found that for Escambia and Santa Rosa counties, “This ratio is at a very manageable level. It implies no widespread financial overstretching to purchase a home in the region. Any respectable gains in the local job market could translate into further home price gains.”
Other significant findings in the report included that price declines in the local market were unlikely and the local market would experience a 5 percent decline only under extremely unlikely scenarios of much higher mortgage rates.
Sadly, those words were not prophetic. The quarterly House Price Index generated by the Federal Reserve Bank of St. Louis clearly shows that Pensacola shared in the pain of the housing market collapse.
The index includes all transactions in an area using both sales prices and appraisals. Between the height of the market in the fourth quarter of 2006 to its lowest point in the second quarter of 2012, house prices fell 29.4 percent in the Pensacola area.
In addition to clearly showing the run-up in prices that began in 2003, the index also shows that the area is just now recovering to 2005 price levels. While prices have rebounded 17.5 percent from their lowest point as of the last quarter of 2015, as illustrated by the trend line, they are still below what might be expected if the bubble had not happened.
Now, just 10 years removed from the height of the housing bubble, there are whispers that another bubble is forming. Housing prices in many areas are once again rising at rates faster than average wage growth, credit conditions are loosening with Fannie Mae and Freddie Mac allowing only 3 percent down payments, and housing supplies are tightening. Are we headed for a repeat of the last disaster?
To answer this question, one first needs a definition of “housing bubble.” It’s typically defined as a deviation of the market price from the fundamental value of the house.
Secondly, one needs to be able to tell if this deviation is occurring. This would seem to be a straightforward task. However, like many things in the economic world, there is more than one way to analyze the question, and experts don’t always agree on what these analyses show.
For example, one researcher might point to home prices increasing at a higher rate than inflation, coupled with a sharp divergence between home prices and rental prices, as an indication that homes are overpriced. Another will examine the ratio between housing price and income and, having noted that it is higher than historical norms, might conclude that there is a price bubble. Still another researcher will look at mortgage-servicing costs as related to income, and argue that if these are within manageable levels, there is no bubble.
The current consensus amongst experts seem to be that while housing prices are climbing, they are doing so because new houses are not being built to increase the supply. Identified as a major indicator of the prior bubble, new homes were being built at a furious pace even as prices continued to climb. Under normal economic conditions, prices tend to fall when supply grows. When that does not occur, it suggests that other forces are in play to support the higher price.
While housing starts are not readily available for metro areas, a proxy for specific new home construction statistics is employment in the construction industry itself. By comparing home prices to the number of construction workers, one can see how these forces might interact.
The data show construction employment at its height during the price bubble and lagging behind prices ever since. This fact suggests that experts may be correct in their view that conditions are still operating in a traditional fashion and a lack of housing supply is supporting home prices at present levels rather than the factors that generate bubbles. Building permit data from the U.S. Census Bureau tends to support this notion as well – at the height of the bubble in 2006 the Pensacola area saw 2,488 permits issued covering 3,126 housing units. By 2012, the number had dropped to 1,466 permits covering only 1,594 units – or half the planned construction.
The most recent data does show housing starts and construction employment on the increase. It will be interesting to watch how these trends play out in the coming months.
Phyllis K. Pooley serves as director of special projects with the University of West Florida Office of Economic Development and Engagement in Pensacola.
Greatest Show On Earth: Circus Train Passes Through Escambia County
June 27, 2016
The “Blue Unit” of the Ringling Bros. and Barnum & Bailey circus trains passed through Escambia County Sunday morning, moving from South Florida to California. The circus has two trains, the red and the blue, that criss-cross the county. Photos by Larry Seale for NorthEscambia.com, click to enlarge.
Tennessee Beats Pensacola 3-0
June 27, 2016
The Pensacola Blue Wahoos bats cooled down against the Tennessee Smokies starting pitcher Paul Blackburn.
Blackburn shut down the Pensacola lineup allowing just two hits in six scoreless innings, walking three and striking out five as the Smokies shut out the Blue Wahoos, 3-0, Sunday at Smokies Park.
Blackburn improved to 5-2 with a 2.35 ERA this year.
The only Pensacola hitters to earn hits in the game were shortstop Alex Blandino (1-4), center fielder Jeff Gelalich (1-3 with walk) and Phillip Ervin (1-3 with walk). They are the top three hitters in the order and Pensacola was 3-28 for the game.
Ervin singled on a bunt back to the pitcher and then stole his 22nd base of the year, which is tied for fifth in the Southern League.
The Blue Wahoos are now 2-2 in the second half and 43-31 overall.
Pensacola starting pitcher Jackson Stephens did work 5.1 innings but gave up three runs on seven hits and five walks, while striking out three. He dropped to 5-6 with a 3.19 earned-run average. James Farris relieved Blackburn and threw two scoreless innings and struck out four. The game was closed by Smokies closer Juan Paniagua, who walked one in one inning and earned his fourth save this season.
In the third inning, Tennessee second baseman Ian Happ doubled in center fielder Jacob Hannemann to put the Smokies up, 1-0.
Tennessee left fielder Trey Martin then laid down a squeeze but that scored right fielder Billy McKinney to put the Smokies ahead, 2-0.
The lead extended to, 3-0, over Pensacola when Tennessee catcher Victor Caratini walked to lead off the sixth inning. Caratini then scored on shortstop Daniel Lockhart’s ground ball single to right field.
Pensacola relievers Jacob Ehret, and Evan Mitchell pitched 2.2 innings of scoreless relief giving up one hit and striking out three. Tennessee pitchers combined to retire 12 Pensacola hitters in a row between the fourth and eighth innings.
Voters Receive New ID Cards
June 27, 2016
Voters in Escambia County were recently mailed a new voter information card from the office of David Stafford, Escambia County Supervisor of Elections.
Voters are strongly encouraged to review their new cards carefully, particularly their party affiliation and polling location. Voters should contact the elections office immediately with any necessary updates.
The new cards have green text making identification of the most current card simpler. The updated card reflects Escambia County’s State Senate District number change to District 1.
Voter information cards are NOT required when voting; Florida requires approved photo and signature ID when voting in person.
First Baptist Of Bratt Honored For Operation Christmas Child Collections
June 27, 2016
Christmas is still several months away, but Christmas was on the mind of church members Sunday at the First Baptist Church of Bratt.
The church has served for the past five years as a collection point for Operation Christmas Child, which provides simple, gift-filled shoe boxes that bring Christmas joy and evangelistic materials to children in countries across the globe.
Sunday, Bethany Daily, Northwest Florida area coordinator for Operation Christmas Child, gave special recognition to Tim Hawsey and Michelle McKinley at the church. Over 2,300 boxes have been collected by the First Baptist Church of Bratt since 2010.
Submitted photos for NorthEscambia.com, click to enlarge.
Two Molino Residents Injured In Cantonment Crash
June 26, 2016
Two people were injured, one seriously, in a single vehicle accident in Cantonment Saturday afternoon.
The Florida Highway Patrol said 70-year old John Wall of Molino was southbound on River Annex Road approaching Muscogee Road when he lost control of his 2004 Chevrolet Avalanche, left the roadway and struck a tree.
Wall received minor injuries, while his passenger, 53-year old Laura Montoya of Molino, was seriously injured. Both were transported to Baptist Hospital by Escambia County EMS.
The crash was not alcohol related, and both victims were wearing their seat belts, troopers said.
Any charges against Wall are pending, according to the FHP.
NorthEscambia.com photos by Kristi Barbour, click to enlarge.
Scooter Driver Critical After Beulah Crash
June 26, 2016
The driver of a scooter was critically injured in a wreck Saturday afternoon in Beulah.
Tommy Mitchell, 50, was westbound on Nine Mile Road near Beulah Road in a 2014 Chevrolet Pickup when he turned into the path of a Yamaha Scooter driver by 51-year old Brian J. Moulyet of Pensacola, according to the Florida Highway Patrol.
Moulyet was airlifted by LifeFlight helicopter to Sacred Heart Hospital in critical condition. Mitchell was not injured.
Mitchell was cited for an improper left turn by the FHP.
FDOT: Weekly Traffic Alerts
June 26, 2016
Drivers will encounter traffic disruptions on the following state roads in Escambia and Santa Rosa counties as crews perform construction and maintenance activities.
Escambia County:
- Interstate 10 (I-10)/U.S. 29 Interchange Improvements – The following traffic impacts will occur Sunday, June 26 through Thursday, June 30 from 8 p.m. to 6 a.m. to allow crews to perform bridge widening work:
- Alternating lane closures on I-10 near U.S. 29 (exits 10A and 10B).
- The U.S. 29 south to I-10 eastbound ramp will be closed. Traffic will be detoured south to make a U-turn at Diamond Dairy Road.
- The U.S. 29 north to I-10 westbound ramp will be closed. Traffic will be detoured north to make a U-turn at Broad Street.
- Drivers are reminded that the speed limit on I-10 near U.S. 29 has been lowered to 50 mph.
Santa Rosa County:
- I-10 Widening – Alternating lane closures, between the Escambia Bay Bridge and S.R. 281 (Avalon Boulevard/Exit 22), Sunday, June 26 through Thursday, June 30 from 8 p.m. to 6 a.m. as crews continue widening work. In addition, alternating lane closures on Avalon Boulevard near the I-10 interchange for bridge work. Drivers are reminded that the speed limit has been lowered to 60 mph. Be alert for construction vehicles entering and exiting the roadway.
- State Road 87 – Construction crews are building the new northbound bridge across the Yellow River in Milton. Although the river will remain open during construction, boaters and kayakers are encouraged to use extra caution when approaching the bridge.
All activities are weather dependent and may be delayed or re-scheduled in the event of inclement weather. Drivers are reminded to use caution, especially at night, when traveling in a work zone and to watch for construction workers and equipment entering and exiting the roadway.
Vehicle Fire Threatens Mobile Home
June 26, 2016
Firefighters were able to keep a vehicle fire from spreading to a nearby mobile home Saturday near Molino.
The fire was reported to be fully involved and threatening a nearby structure on Casey Lane of Highway 95A. The blaze was quickly brought under control by responding firefighters.
NorthEscambia.com photos by Kristi Barbour, click to enlarge.
Chance Of Showers Tonight
June 26, 2016
Pictured: Saturday morning’s sunrise is reflected in pool of water in Davisville. Photo by Ditto Gorme for NorthEscambia.com, click to enlarge.
Here is your official North Escambia area forecast:
Tonight: A 30 percent chance of showers and thunderstorms before 1am. Partly cloudy, with a low around 74. Southwest wind around 5 mph becoming calm in the evening.
Monday: A 40 percent chance of showers and thunderstorms after 10am. Partly sunny, with a high near 94. Calm wind becoming south around 5 mph in the afternoon.
Monday Night: A 30 percent chance of showers and thunderstorms. Mostly cloudy, with a low around 74. Southwest wind around 5 mph becoming calm in the evening.
Tuesday: Showers and thunderstorms likely. Mostly cloudy, with a high near 89. Calm wind becoming southwest around 5 mph in the morning. Chance of precipitation is 70%.
Tuesday Night: A 30 percent chance of showers and thunderstorms. Mostly cloudy, with a low around 73. West wind around 5 mph becoming calm in the evening.
Wednesday: Showers and thunderstorms likely. Mostly cloudy, with a high near 87. Calm wind becoming northeast around 5 mph in the afternoon. Chance of precipitation is 60%.
Wednesday Night: A 20 percent chance of showers and thunderstorms. Mostly cloudy, with a low around 70. South wind around 5 mph becoming calm.
Thursday: A 40 percent chance of showers and thunderstorms. Partly sunny, with a high near 90. Calm wind becoming south around 5 mph in the afternoon.
Thursday Night: Partly cloudy, with a low around 73. South wind around 5 mph becoming calm after midnight.
Friday: A 30 percent chance of showers and thunderstorms. Mostly sunny, with a high near 91.
Friday Night: A 20 percent chance of showers and thunderstorms. Partly cloudy, with a low around 74.
Saturday: A 40 percent chance of showers and thunderstorms. Partly sunny, with a high near 90.
Saturday Night: Mostly cloudy, with a low around 75.
Sunday: A 40 percent chance of showers and thunderstorms. Partly sunny, with a high near 92.