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Neighborhood Report

Getting back to normalcy

With a housing glut and fewer buyers, last year's heated market has cooled. Agents advise sellers to set realistic prices.

By BILL COATS
Published September 29, 2006

A year ago, Hillsborough County's housing market was hyperventilating. Now it's sighing.

"The people who are selling are very fortunate," said Vince Arcuri, a real estate agent based in Odessa.

Why? Because everywhere Arcuri looks, he sees overpriced houses. One's $50,000 too high here. Another's 30 percent out of whack there.

"They're all overpriced," he said.

Statistics from the Hillsborough County Property Appraiser indicate that the number of home sales in April, May and June had dropped noticeably from the same period last year. But prices were 11 percent higher countywide and 25 percent higher in some neighborhoods north of Tampa.

They won't stay there, home sellers say.

"Inventory has quadrupled,'" said Brad Monroe, the New Tampa-based president of the Greater Tampa Association of Realtors. "Sales are off by 40 percent. There's downward pressure on prices."

"It's getting very, very slow," said Yuly Vazquez, a Tampa real estate agent who has held four-hour open houses where only two or three people strolled in.

A year ago, few home sellers needed open houses. Buyers were snatching up homes within a week of their appearance on the market.

A fever had been building.

Years of low interest rates had lured thousands of first-time home buyers out of their apartments. Tampa Bay's hearty job market kept drawing new residents from other towns.

Then, two additional accelerants sent prices into overdrive. First, home builders began running out of big buildable land tracts in Hillsborough, and started bidding up the acres that remained.

With prices heating up, investors realized they could buy a new home before the foundation was dug, and sell it at a profit before the roof was shingled. They swarmed into the market, making houses a hotter play than stocks.

In Monroe's 26 years in the business, he considers last summer to be the first serious seller's market he has seen. He contends the frenzy peaked in October, when the supply of houses began to grow.

Newer factors turned the tide. Home buyers faced higher mortgage interest rates as the Federal Reserve sought to keep a lid on inflation. Two busy hurricane seasons, coupled with the rising home values, sent insurance costs soaring.

Now, with all those barriers to buying a home, it's a buyer's market.

"They've never had as much product to choose from," Monroe said. "Sellers are going to have to be more aggressive."

"This is the best buyer's market I have ever seen, and I've been selling houses for 15 years," Arcuri said.

The speculators are gone, yet the building boom they encouraged is still evident.

"There's a whole bunch of brand-new houses that have never been lived in that aren't selling," Monroe said.

Arcuri contends the new houses are soaking up the scarce buyers, leaving older houses with fewer takers.

Many buyers are from out of state; locals are balking, Arcuri said.

Vazquez said his last home sale was to a buyer from New York, who had 95 percent financing. He paid $185,000 for a new house near Busch Gardens.

"Houses $200,000 and up are real hard to sell," Vazquez said.

Arcuri and Monroe advise sellers not to peg their homes' prices to sales during the past year. That was too high, they agree.

"We need to go back to about mid-2004," Arcuri said. "That's where the market is now."

Last year, Arcuri invested an average of eight hours selling a house, he estimated. Now it's more like 40 or 50, plus extra advertising expenses.

Monroe's Realtors association predicted last week that it would lose 10 percent of its members next year.

His statewide association reported Monday that August home sales in the Tampa Bay area had dropped 42 percent from the prior August. These exclude sales of new homes or those not involving a Realtor.

Yet experienced Realtors aren't distressed by the changes. They see them as a return to normalcy.

Monroe said last year was his association's best ever, but this year should be the third best.

"The market was out of control," Arcuri said. "We needed this adjustment."

Bill Coats can be reached at coats@sptimes.com or (813) 269-5309.

[Last modified September 28, 2006, 11:58:23]