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Talk of the bay

Chance of housing bubble slim, Realtor group says

By SCOTT BARANCIK
Published September 26, 2005

Local and national Realtor groups have long protested the existence of a housing bubble. It's surely a self-serving argument: Brisk home sales and high prices mean better real estate commissions.

But in an analysis released last week, researchers at the National Association of Realtors put their numbers where their wallets are.

According to the report, the chances that Tampa Bay area housing prices will decline in the near future are "extremely unlikely." Even then, prices would fall just 5 percent.

Just what scenarios would precipitate a 5 percent decline? A steep rise in mortgage interest rates, combined with a significant loss in local jobs. Examples include a 12.5 percent mortgage rate combined with 132,000 job losses, a 13.5 percent rate and 66,000 jobs, or a 14 percent rate and 34,000 jobs.

Fat chance, the Realtors group says. Pinellas County has added 98,000 jobs in the past five years. Mortgage rates would have to double to cause the bubble.

Moreover, the report says, the fact that housing prices are growing faster than incomes is misleading. The more relevant indicator - comparing the median mortgage-servicing cost to incomes - shows most bay area homebuyers are not "overstretching" to buy a home.

"Solid housing fundamentals are at work in our local marketplace today," Paul Wikle, chairman of the Pinellas Realtor Organization said in an accompanying news release. "The facts simply do not support the possibility of a housing bust in our local market."

[Last modified September 23, 2005, 20:33:03]