This is how it starts... this cycle is probably 10+ years, like the Nasdaq. The chart at sptimes.com
is telling. It's all about inventory... houses are commodities.
Housing market nears its peak
The Tampa Bay area market is expected to stay strong, even as it slows. Some experts call it a return to normalcy.
By HELEN HUNTLEY, Times Personal Finance Editor
Published November 12, 2005
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The Tampa Bay area's red hot housing market is starting to cool, with sales slowing and the inventory of available homes rising fast. There also are indications prices are leveling off, although they remain substantially higher than they were a year ago.
"The pendulum is swinging back, and we're coming back down to reality," said Jackie Sayles, a real estate agent with First in Real Estate in New Tampa. "It's not a bad market, it's just that we never saw a seller's market like the one we had. I think we'll see prices come back to where they should be."
Sayles said a home that went up for sale in Tampa Palms in August still hasn't sold. Last year, that same house would have sold in days, she said.
"With interest rates rising, I think there is a good chance that the market has peaked, but we also feel activity will remain strong for quite some time," said Mark Vitner, senior economist for Wachovia Bank.
The Tampa Bay area is expected to remain one of the stronger housing markets nationwide. Sales have slowed nationally as hurricanes and high gas prices have made an impact on consumer confidence. In addition, mortgage interest rates have been inching up and have reached their highest level in two years. Rates on 30-year fixed mortgages topped 6.3 percent on average last week, up from 5.76 percent a year ago.
This week Toll Brothers, the nation's largest builder of luxury homes, said it expects to sell fewer homes next year than previously expected and will make less money as a result. The announcement sent shock waves through housing stocks. However, the company noted that some of its markets remain strong, including southwest Florida. The Tampa Bay market was hitting on all cylinders in early summer, and listings became seriously depleted. Realtors said they had difficulty finding properties to show would-be buyers.
That remains a serious problem in the lower price ranges.
"Anything under $100,000 in a residence gets sold immediately," said Jack Gavish, a Brooksville real estate broker.
But at prices above $200,000, and particularly above $500,000, sales have slowed and listings have burgeoned. In Pinellas County, homes priced at $500,000 or more made up 30 percent of the listings but only 11 percent of the sales in October.
The county's supply of homes for sale rose a whopping 76 percent between June and October as sales declined 20 percent. A similar trend can be seen in Hillsborough, with listings up 31 percent and sales down 14 percent between July and September. In Hernando County there are now more than 2,700 homes on the market. That's about twice as many as there were earlier in the year, said Lisa Gurske, executive director of the Hernando County Association of Realtors.
New homes are being added to the listings at the same time that homes are taking longer to sell. In the St. Pete Beach area, for example, the average house now sells in 61 days, compared with 42 days a year ago, said Stephanie Christensen, an agent with Keller Williams Gulf Coast Realty in St. Petersburg.
The slowdown appears to be having a modest impact on prices. The Tampa Bay area's median home sale price peaked at $217,400 in July, a 30 percent increase over the prior year. In September it was $215,200.
Two builders, Morrison Homes and KB Home, have peppered Pasco real estate offices with offers of $3,000 bonuses for agents who steer them customers. At Lake Talia in Land O'Lakes, builder US Home reduced one model formerly listed for $440,000 to $420,000 to counter competition from resales by investors.
That's a big change from recent years when some builders held lotteries and rationed lots.
"I think we're reverting back to a buyer's market," said Pam Koenig, an agent with ERA-Russell Adams Realty in Land O'Lakes.
She noted that the buildup in listings has a particularly strong impact when nearly identical houses are for sale in the same neighborhood. The only point they can compete on is price, Koenig said.
Economist Vitner predicts that overall home prices will continue to go up in the bay area, just more slowly. He forecasts a 6 to 8 percent increase next year and a 4 to 6 percent increase in 2007.
Areas that have attracted a lot of speculation - such as condo conversions and vacant lots - are more vulnerable to shifts in the market.
"The condo conversion market is out of control and it's going to crash and going to crash soon," predicted Tampa Bay housing analyst Marvin Rose. Rose, president of Rose Residential Reports in Tarpon Springs, said some developers are selling 75 percent or more of their conversion inventory to investors.
St. Petersburg real estate broker Ben Friedlander said some condo investors now are deciding to cash out rather than trying to rent their properties.
"People who were holding things are suddenly launching them on the market, in the $150,000 to $250,000 category," he said.
Brooksville broker Gavish said the bloom is off lots in Royal Highlands, a 43-year-old subdivision that covers much of northwest Hernando County.
"For a while, everything in Royal Highlands was going up," he said. "Now I'm seeing more price decreases than increases."
Some analysts say the slowdown is simply a return to normal after a period of heated activity.
"We're seeing a return to normal seasonal timing," said Tony Polito, who tracks Tampa Bay new home construction for the Tampa office of MetroStudy, a housing consulting firm. "People have just forgotten that that typically happens. I don't think it's a signal that the market's changed dramatically. I still think we're going to have some pretty strong numbers out of the Tampa Bay area and Florida. We'll probably outperform the nation."
He said third-quarter closings in the Tampa Bay new home market were the best ever, with 5,352 units occupied in the five-county area. Another 11,877 are under construction, the most ever.
"A year ago the average price was $223,000 and today it's $270,000," he said. However, Polito said the rate of increase has slowed.
He said he does not think the the Tampa Bay housing market has peaked yet, but will sometime next year.
One reason for the listing buildup may be that more homeowners are setting extremely optimistic prices. Two examples:
A 2,657-square-foot house in Pasco County's Ballantrae subdivision purchased in July for $241,900 is listed for sale at $349,900.
A 3,600-square-foot house on 26th Avenue N in St. Petersburg purchased last November for $483,000 is listed for sale at $1.2-million. The house sold for $250,000 five years ago.
At higher prices, there are fewer potential buyers since incomes have risen far more slowly than home prices. St. Petersburg real estate agent Greg Burton said the buyer of a $350,000 home faces more than $700 a month in real estate taxes and insurance costs before even considering the mortgage payment.
"That's why people can't afford to move," he said.
Some real estate agents say they are as busy as ever.
"Trust me, there is no slowdown," said Mike Hughes of Coldwell Banker in Tampa.
Homes selling for less than $500,000 are selling quickly, he said. Hughes said his office had the highest sales volume ever in October: $10-million.
"New Tampa's been doing well, I can't keep a home listed in Seminole Heights for more than a few days, and South Tampa is strong," Hughes said. "I think the only ones who are having problems selling are the ones fishing for an inflated price."
Times staff writers James Thorner, Dan Dewitt, Michael Van Sickler, Sharon Bond and Kris Hundley contributed to this report. Helen Huntley can be reached at hhuntley@sptimes.com or 727 893-8230. |
