On the bubble, but no need to worry
Housing prices for the Tampa-St. Petersburg area are inflated, according to a published report.
By JUDY STARK, Times Homes Editor
© St. Petersburg Times
published October 19, 2002
The November issue of Consumer Reports offers a report on how to boost the value of your home, avoid debt and make improvements that pay off.
It also includes a map showing "where the bubbles are" -- housing markets that, according to one analyst, are overpriced.
The Tampa-St. Petersburg area is on a list of markets that are 15 percent to 20 percent inflated. Also on that list: New Orleans, Las Vegas, Madison, Wis., Washington, D.C., and Daytona Beach.
Price inflation of 15 percent to 20 percent "is not a whole lot," said the study's author, Ingo Winzer, president of Local Market Monitor of Wellesley, Mass.
And it doesn't mean prices will fall by 15 percent to 20 percent, he said. Prices in the Tampa Bay area "are more likely to go flat, or sideways. That's my best guess. People don't need to be worried about the bottom falling out of the housing market all of a sudden," he said.
His methodology, which he acknowledged "isn't all that accurate, quite frankly," involves analyzing the relationship between price and income. His income estimate for this area for 2002 was $30,700, a number he developed out of the 2000 income figure of $27,214 from the federal Bureau of Economic Analysis. That is very close to the U.S. average annual income figure of $28,214, and includes both wage income and unearned income (pensions and interest income, which retirees count on).
Retirement markets such as Tampa-St. Petersburg "are always different" from those that are heavily dependent on job growth, Winzer said, acknowledging that this area is less of a pure retirement market than other parts of Florida, such as the Fort Myers-Naples area or some parts of the Atlantic Coast. People move to retiree areas because they want to, and generally they stay there. In those where the market is shaped by jobs, people move to an area to take a job, and if the job disappears, they may move to find employment.
"It's my belief that in the last few years, many people who are not even yet of retirement age have bought property, second homes or vacation homes, in anticipation of retiring with the gains they have made in the stock market. Therefore, in many retirement markets, prices have gone up higher than they otherwise would have done," Winzer said.
"So there has been perhaps an artificial demand for a while that I believe is going to abate. The stock market is lower, so people have less of that money to invest now."
Winzer predicts a housing slowdown nationwide, "though it's hard to say when that's going to be. We do look at job growth in lots of markets, and in many markets it has slowed down from last year. What tends to happen with home prices is that they lag behind by a year or so. This year in many markets you'll see a (leveling off) of prices. They won't go much higher. I don't think they'll fall," except in a few markets where "the local economy is in very bad shape. But in most, that is not the situation."
Related stories
Crossing new thresholds
Home Front
Community living
Rental restrictions may crimp plans
Homebuyer U
On the bubble, but no need to worry
House Values
Back to Homes
