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Home prices not falling fast despite high stock

There's a big supply of homes. There's a demand as people relocate here for jobs. Yet prices fell only 1.2 percent in a year.

By BILL COATS AND CATHERINE E. SHOICHET Times Staff Writers
Published September 14, 2007

Last year, a Brandon townhouse seemed like the perfect investment for Richard Wojciechowski.

He bought a 1,700-square-foot Sabal Pointe home and listed it at $229,000. The 68-year-old retired banker thought it would be an easy sell.

But 14 months later, in Hillsborough's slowest housing market in seven years, the place is still for sale. Realtors have persuaded Wojciechowski to drop the price to $204,900. That's more than $15,000 lower than the median home sale price in Brandon last quarter, and it's as low as he wants to go.

"Everything went downhill after I bought, so I got stuck," said Wojciechowski, of Chicago. "I'm not interested in taking a loss. The mortgage is killing me every month."

His tenacity helps explain a mystery that the president of the Greater Tampa Association of Realtors calls "the $64,000 question": Why aren't house prices plunging in Hillsborough County when the inventory awaiting buyers has quintupled in the last two years, and sales have slowed by more than half?

Clue No. 1, Realtors say, is sellers' denial. Many cannot accept the reality that the blank-check sellers' market of 2005 has evaporated, replaced by a leery buyers' market.

"The sellers are still thinking, 'I should get what my neighbor got two years ago,'" said Ginger Perkins, a Tampa Realtor. "The buyers are waiting for the market to hit bottom."

Clue No. 2: While home builders are outdealing individual sellers, they are reluctant for several reasons to cut prices.

"We like to try to maintain our price," said Al Torchia, senior project manager at Toll Brothers' Estates at Harbour Isles in Apollo Beach. "It keeps the continuity in the neighborhood. The people that have bought don't feel like they are losing money."

Clue No. 3: Hillsborough has an ample supply of potential buyers ready to pay a reasonable price, Realtors say. Roughly 1,000 houses a month are selling. Many home seekers are moving to Tampa for jobs. Others are enjoying bargain basement rents in the glut of investor-owned houses, waiting to buy when prices sag enough.

"We have a warehouse of renters around us," said Kristy Darragh, a Realtor in New Tampa.

Experts predict the housing slump will persist into next year nationwide. But last month, Tampa may have received a hint that the bottom is in sight. The Realtors association reported that its supply of homes for sale shrank a hair, after mushrooming from 3,700 houses to 20,800 in two years.

"You say, boy, that's going to be a sign that things are going to straighten out," said the group's president, Carlos Fuentes of Lutz.

The Hillsborough County Property Appraiser's Office calculates that prices during the second quarter were only 1.2 percent lower than the same period last year.

According to Rose Residential Reports, a Tarpon Springs research firm for the home building industry, prices for new homes selling during the first seven months of this year in Hills-borough were 4 percent lower than comparable sales last year.

Together, those numbers suggest that Hillsborough County's builders account for nearly all the price-cutting here, which isn't saying much.

Many builders are emphasizing nonprice concessions.

National builder KB Home started offering a special deal in the Tampa Bay area several months ago, spokeswoman Carla Kane said.

Out of the total purchase price, 4 percent goes toward closing costs. That can make a significant difference for families buying homes for the first time, she said.

'Huge bonuses'

Home builders also are reaching out to real estate agents.

"Builders are offering commissions anywhere from 6 to 10 percent," said Perkins, the Tampa Realtor. "Some of them are paying 3 percent, plus huge bonuses."

Nationwide, incentives like the commissions and freebies cost Lennar Corp. an average of $43,700 per house in the second quarter this year, according to a company report. The parent company of Engle Homes reported that its incentives in Florida averaged $53,800 per home in the second quarter.

Yet based on market research, KB Home lowers its prices rather than offering incentives, Kane said.

"The buyers are looking for the best price versus some of the free offerings," she said.

Toll Brothers' Torchia said the luxury home builder has a new approach for Tampa Bay's changing market: lower prices on smaller homes.

Now, in addition to larger models, Toll Brothers is selling 2,250-square-foot homes in Harbour Isles at a base price of $339,975. That's $110,000 less than the price of their larger luxury homes there.

"We have a product now that we can offer to many more people," he said. "And it seems to be selling."

'A break-even point'

Hillsborough County's noticeable price declines last quarter occurred in neighborhoods where home builders were most active during the boom.

Today, areas like South Shore, Riverview, the Race Track Road corridor and New Tampa may have the largest surpluses of houses to unload. They also may have some of the largest numbers of investor-owners, because that's where homes were available when the 2005 buying frenzy mobilized speculators.

"Those are the areas that came down the most, because the prices were the most inflated," said Darragh, the New Tampa Realtor.

Anthony Teta tried lowering the price on his 1,400-square-foot Brandon home. He started at $229,000 and went to $189,000.

"I was coming down to a break-even point," he said. But with nearby builders offering major incentives, Teta felt he could not compete.

On the Internet, a real estate Web site still lists his house as "priced to sell." Teta took the "For Sale" sign down weeks ago.

"I love the house. I love the neighborhood," he said. "I had to remind myself of that. I'm going to be happy to stay there for longer."

Catherine E. Shoichet can be reached at cshoichet@sptimes.com or 813 661-2454.

[Last modified September 13, 2007, 08:14:47]