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In market tug-of-war, homes don't move
Tampa Bay area home sales keep probing new bottoms. September's totals were off 39 percent from the none-too-spectacular sales of September 2006.
By James Thorner, Times Staff Writer
Published October 15, 2007
Tampa Bay area home sales keep probing new bottoms. September's totals were off 39 percent from the none-too-spectacular sales of September 2006. That part about probing bottoms sounds proctological, but the market is about as savory as a barium shake. Why aren't people buying? Prices have retreated up to 20 percent. Builders are giving away the kitchen sink, along with Jacuzzis and hard-wood floors. Banks are dumping repossessed homes at discounts. Many blame high property taxes and insurance. The argument has a ring of truth, but also weaknesses. Sales are hurting to varying degrees all over the country, including areas where you can insure your house for $500 a year and taxes are lower than ours. Atlanta, anyone? Taxes, while high, are predictable. If property values rise, taxes march in lock step. Insurance is a different story. Hurricanes bushwhacked us in 2004-05 and insurance companies jacked our rates. But many of us, away from the water, at least, still pay only $75 more a month. One of the best explanations comes from Lennar Homes president Stuart Miller. Buyers are everywhere, he said, but they're "unmotivated." But why? The answer may lie in market psychology. Many buyers wait for home prices to strike bottom, whenever that might be. They assume prices have room to fall, so why buy a diminishing asset? On the other hand, sellers resist lowering prices. A home sells for $290,000 and the guy down the street asks $340,000 for the same model. Needless to say, the latter home rots on the market a year. Dig deeper. Many of these sellers are straightjacketed: They siphoned off home equity to install pools and buy cars. They owe more on the house than they can sell it for. We're witnessing a buyer-seller standoff complicated by tighter mortgage lending, high taxes and ballooning insurance. Sounds like as good an explanation as any. James Thorner can be reached at thorner@sptimes.com or 813 226-3313. Read his (Un)Real Estate blog at blogs.tampabay.com/realestate.
[Last modified October 15, 2007, 06:19:24]
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