SunTrust (STI:US) Banks Inc. Chief Executive Officer William Rogers said the economy in the Southeast, which has lagged behind the U.S. recovery the past three years, is accelerating led by new construction of condominiums in Miami.
“Miami is having a remarkably fast recovery,” Rogers said in an interview in Atlanta, where the lender is based. “Florida as a whole -- and I spend a lot of time in Florida, as you might imagine -- I am feeling much better about.”
The Miami metropolitan area’s unemployment rate dropped to 8.4 percent in March from 10.6 percent a year earlier, Labor Department figures show. Florida was one of the centers of real estate speculation until prices began falling six years ago. The state’s home prices dropped 49 percent from their peak to January, the third-biggest drop after Arizona and Nevada, according to CoreLogic, a real estate data firm.
While southern Florida attracted real estate investors who bet prices would increase unabated, buying today hasn’t raised concerns about speculation, Rogers said.
“It is real,” he said. Buyers are “coming from Latin America and a lot of it is Eastern European. Miami is in a pretty good recovery mode.”
Other metropolitan economies in SunTrust’s regions are rebounding, Rogers said. Housing in the Nashville, Tennessee, and Washington markets is “back on the upswing,” while Marco Island and Sarasota, Florida, “are showing improvement.”
“We are starting to see some traction,” he said. “In housing, things are stabilizing to stabilized.”
Georgia Still Lagging
Wells Fargo & Co. economists, in a report this month, said Florida’s recovery has “gained considerable momentum” and “all indications point to stronger gains this year.”
The SunTrust CEO said Georgia is still lagging, with Atlanta showing only modest job gains, though “at least it is not on the downswing.”
“Atlanta is a tough housing market,” he said, and office real estate in the metropolitan area is “stabilizing and may be getting better off a pretty low point.”
Mortgage originations have picked up for SunTrust with the expansion of the Home Affordable Refinance Program, which allows homeowners to refinance regardless of how much their home’s value has fallen, Rogers said. About 44 percent of Florida mortgages had negative equity in the fourth quarter compared with 33 percent for Georgia, according to CoreLogic.
“We are uniquely positioned” to take advantage of HARP because of SunTrust’s markets in the Southeast, he said. Loans under the program are “approaching 50 percent” of mortgage refinancing, he said. SunTrust has focused on making HARP loans to its existing customers because it has limited resources for that program, he said.
“How long it will continue everybody is sort of speculating,” Rogers said. “It is a finite group eventually and you run through it, but I think the running room is pretty long.”
Even though the Southeast continues to have a higher foreclosure rate than the rest of the U.S., its long-term prospects are brighter because migration and business creation are expected to continue, Rogers said.
“We are going to grow disproportionately faster than the rest of the country over the next decade,” he said. “I am long-term bullish.”
Shares of SunTrust have risen 30 percent through yesterday, double the 15 percent gain for the KBW Bank Index. SunTrust has operations in Florida, Georgia, Maryland, North Carolina, South Carolina, Tennessee, Virginia, West Virginia and Washington, D.C.
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