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In Tampa Bay area, home costs soaring

Figures show the median sales price for existing houses jumped 27 percent.

By JEFF HARRINGTON
Published August 16, 2005

Defying anecdotal evidence of a slowdown in some parts of the country, home sales in the Tampa Bay area are still on a double-digit roll.

The median sales price for existing homes in the local market jumped 27 percent in the second quarter, from $153,700 to $195,300, according to figures released Monday by the Florida Association of Realtors.

Statewide, the median sales price for the second quarter rose 29 percent to $233,600. A year ago, it was $180,700. The national median price for an existing single-family home was $208,500 in the second quarter in metro markets, up 13.6 percent from a year ago, based on a report from the National Association of Realtors.

The bay area stood out, even among fellow Florida cities, in volume of deals. A total of 15,817 existing homes changed hands in the Tampa-St. Petersburg-Clearwater metro market, a 24 percent gain. Statewide, the number of closings rose 4 percent to 74,317 homes.

Surging sales prices have been driven by several factors: low interest rates, easily obtained mortgages, a lack of available homes compared to demand and Florida's popularity for investment and relocation buyers.

"Florida is the strongest economy in the country, and one of the things about being the strongest is everybody wants to do business there," said Mark Vitner, a senior economist with Wachovia Corp. and longtime observer of Florida's growing clout.

Nationally, on balance, the real estate front is still strong.

Out of 149 metro areas, 67 reported double-digit annual increases in median home prices for existing homes, and seven posted "generally modest" price declines, according to figures from the National Association of Realtors.

The strongest price increase was in the Phoenix-Mesa-Scottsdale area of Arizona, where the sales price of $243,400 was up 47 percent from a year earlier. Two Florida cities had the second- and third-biggest increases: Cape Coral-Fort Meyers at $266,800, up 45.2 percent from the second quarter of 2004; and Palm Bay-Melbourne-Titusville at $204,000, up 40 percent.

David Lereah, chief economist with the National Association of Realtors, said the market appears to be driven by standard supply and demand, as opposed to past price increases in a given area.

None of the areas citing declines in the past quarter had recorded rapid gains, the national Realtors group noted. What distinguished the troubled areas was a mix of a large supply of available homes and job troubles.

Median resales ranged from a low of $73,400 in Danville, Ill., to nearly 10 times that amount, $726,900, in the San Francisco-Oakland-Fremont area of California.

"The continuing shortages of housing inventory are driving the price gains," Lereah said. "When you look at appreciation of home prices relative to the overall rate of inflation, these are the strongest increases on record."

Although some parts of the country have begun to develop a surplus of inventory that could mark the end of quick-buck speculation, nobody is talking about a burst in the housing bubble.

Florida is particularly well-insulated because homes in the Tampa Bay area and much of the state are still slightly below the national average. They remain a bargain for those based in pricey pockets of the Northeast and West Coast.

Developers face zoning and permitting constraints in this area that have slowed residential development and boosted home prices, Vitner said. He dismisses talk of a housing bubble but predicts homebuilders will eventually catch up, interest rates will rise and prices will taper off to single-digit annual increases.

"When interest rates begin to rise and reflect the fundamentals of this economy, the interest rates will be 1 or 2 percentage points higher than they are today in the bat of an eye," he said. "My guess is it's a 2007, 2008 kind of time frame."

--Jeff Harrington can be reached at harrington@sptimes.com or 813 226-3407.

[Last modified August 16, 2005, 01:28:10]