Builders, give those hammers a long rest
Bleak headlines say the home building industry has sunk into its worst trough in a decade.
By James Thorner, Times Satff Writer
Published August 26, 2007
Bleak headlines say the home building industry has sunk into its worst trough in a decade.
With sympathies to laid-off construction workers and model home sales staff, three cheers for the trough. It's good news for Tampa Bay area homeowners.
No, I'm not gargling Johnny Walker Black Label. With media obsessed with daily dips in the stock prices of home builders, it's easy to lose sight of the big picture.
In our region the big picture depicts a glut the size of Goliath. In July, of 41,000 homes for sale in Pinellas, Pasco and Hillsborough counties, about 2,400 sold. With so many homes competing for so few buyers, a house sells for about 10 to 20 percent less than it would have 18 months ago.
How to restore supply and demand to their proper balance? Forget about demand for the moment. It's tepid for many reasons: high property taxes and insurance, tighter lending rules, fewer investors to soak up the surplus.
That leaves supply. Aside from sellers yanking their home listings to await better days, the market needs builders to give it a rest.
They gorged heartily during our buy-'em-as-fast-as-they-build-'em cycle. In a free market, you're allowed to profit. But these days the fewer hammer blows on building sites, the sooner home prices will stabilize.
Even the Florida Association of Realtors admitted as much at an annual convention that ends today in Orlando. Economist Ted Jones said Florida builders, on pace to pull about 100,000 construction permits this year, are needlessly feeding an already bloated beast.
For related reasons you need not weep when you hear of condo developers crushed when banks cut off credit. Do the math: Fewer new condos on the market boosts the value of your existing condo.
Market corrections are rarely pretty. It's painful to watch so many mortgage loan officers hit the unemployment doles as home foreclosure attorneys swell payrolls by the hundreds.
But only an industry that's hard and lean will reach fighting trim for the next housing boom that in Florida is as inevitable as sunshine.
Got a tip? Want to comment? James Thorner's new online housing blog, UnReal Estate, can be found at blogs.tampabay.com/realestate starting Monday. Thorner can be reached at thorner@sptimes.com. mce_href="mailto:thorner@sptimes.com">thorner@sptimes.com or (813) 226-3313.