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Housing market will come back

Based on economic trends, an expert predicts short-term pain will lead to long-term gain.

By James Thorner, Times Staff Writer
Published June 15, 2007

He's down on the mat, he's bloody, the fans are booing. But can the Tampa Bay area housing market rise from the arena as the Comeback Kid?

You can bet the house on it, said Lawrence Yun, senior economist at the National Association of Realtors.

Yun was appointed last month as the top economic spokesman for the Washington-based Realtors group. He succeeded economist David Lereah, discredited after maintaining rosy outlooks amid an increasingly troubled housing market and promoting his 2005 book, Are You Missing The Real Estate Boom - Why Home Values and Other Real Estate Investments Will Climb Through the End of the Decade.

In a slide show Thursday to the Greater Tampa Association of Realtors, Yun delivered a message of short-term pain leading to long-term gain.

"Five years from now you will be very happy you're in this business and located in Tampa," Yun said over a brown-bag lunch to about 75 real estate agents.

In Yun's view, rising incomes and declining home prices ought to have stimulated sales this year were it not for housing bubble scares in the media.

In one worst-case scenario, an economist suggested the gap between incomes and home prices would depress housing values 40 percent.

Yun scoffed at the idea: The real measure of affordability, he said citing a formula, is mortgage obligation relative to income. He clicked a slide showing Tampa-St. Petersburg-Clearwater hovering at the national average. Much of California isn't so lucky, nor is high-priced Miami and Naples.

"It's very, very manageable. Nothing alarming in this region," Yun said.

Yun based his housing projections on a list of economic trends: speculators leaving the market, strong job creation, baby boomers buying second homes and reform - a slow process now under way - of Florida's property tax and insurance systems.

On that last item, Yun predicted a "sonic boom," should the state Legislature succeed in bringing insurance premiums back to earth.

Coming off the boom that ended in late 2005, the local housing market's biggest problem is a record-high inventory of homes for sale. Listings hold about 40, 000 houses and condos, quadruple the number of two years ago.

Ever optimistic, Yun suggested a way out of the thicket: Thousands of homes will peel off into the rental market, while others drop off the charts as owners wait out the slump.

"In a job-growth area, people can hold onto the house without being desperate," he said.

If membership rolls are any indication, real estate agents also hope to weather rough times. The Tampa Association of Realtors reported membership ticking up a bit to 9, 200.

Carlos Fuentes, the association's elected president, urged member's to spread the gospel according to Yun.

"You need to know the facts, " Fuentes said. "You need to know how to present them as well."

James Thorner can be reached at thorner@sptimes.com or (813) 226-3313.

[Last modified June 14, 2007, 23:14:06]