Dark clouds begin to part

It's been a gloomy year for builders and sellers, but business is starting to pick up.

By DAN DeWITT, Times Staff Writer
Published December 30, 2007

New home construction in the Villages of Avalon has slowed just as thought most of Hernando County. Open lots are abundant in the newly developed subdivision located just north of County Line Rd.
	[Maurice Rivenbark | Times]

BROOKSVILLE - In 2007, grim phrases describing the local real estate market piled up almost as fast as unsold houses.

Chris Lafakis, an economist with Moody's Economy.com, called the Tampa Bay area market, which includes Hernando County, "brutal, just absolutely brutal." County development director Grant Tolbert said residential construction has "dropped off almost to nothing."

Robert Toll, chief executive officer of Toll Brothers, which builds luxury homes, gave the Tampa Bay market his lowest grade, an "F-minus minus."

"It's bad. Do I have to say any more?" asked Gary Schraut, a Brooksville real estate broker.

Still, Schraut and other real estate agents saw signs that the worst might be behind them, that the housing market, as analysts say, has "found the bottom."

The inventory of unoccupied houses in Hernando's new subdivisions has been cut nearly in half in the past nine months, from 717 in the fourth quarter of 2006 to 359 in the third quarter of 2007, said Tony Polito, director of the Tampa Bay division of Metrostudy, a housing analysis firm.

The average price of existing houses sold in Hernando County climbed slightly in October and November, to $170,000, according to the Hernando County Association of Realtors. And several county real estate agents reported that business has picked up recently.

"A year ago, I wasn't making any sales and I was worried about starving to death," Sue Hughes, a real estate agent with Weichert Realtors in Brooksville, said earlier this month. "In the past, say, 45 days, I've sold six homes. They're selling if they're priced right."

These hopeful indicators are countered by the statistics that inspired all of the negative talk:

- The Association of Realtors reports sales of existing homes in the county have plummeted from a peak of 525 per month in June 2005 to 126 in November, which means the sample is so small that the increase in average price may not mean much, said executive director Ed Carr.

- The number of construction permits the county issued for new houses declined to 29 in November and to 20 in December through the middle of last week, down from 585 in December 2005. So far in 2007, builders had pulled 796 permits. That is down from a record 4,185 in 2005, and is the lowest total since the county began keeping computerized records in the mid 1980s, Tolbert said.

- The inventory of unsold homes in the county, which fell below 1,000 during the peak of the housing boom in 2005, has hovered at more than 4,000 throughout 2007.

Beyond the numbers were well-publicized blows to the market, some from the national builders that were supposed to help insulate the county from sales slumps.

With their high-powered marketing campaigns, the reasoning went, companies such as Lennar Corp. and Levitt and Sons LLC would be able to lure buyers from around the nation even when the local market had dipped.

But Levitt filed for bankruptcy protection in November, leaving homeowners in the company's Cascades at Southern Hills development in Brooksville wondering who would pay to cut lawns and staff the security gates. Other buyers, who had signed contracts for homes that had not been built, didn't know if they would see any return on their down payments.

Lennar, meanwhile, sold dozens of houses in Hernando Oaks at as much as $60,000 below assessed value, according to the Hernando County Property Appraiser's Office. These and other below-market sales in new subdivisions such as Trillium and Sterling Hill have been one of the primary obstacles to a recovery, said analysts and real estate agents.

Real estate agents are also competing against fire-sale prices for properties that have been foreclosed on or are in danger of being foreclosed. Also, because of the high foreclosure rate here and across the country, lenders have tightened loan requirements, narrowing the field of potential buyers.

The market cannot return to normal until these conditions change, real estate agents and analysts said. That will happen, they say; the only question is when.

Hughes and several other real estate agents said they had already seen signs of improvement. Harry Willet, a Spring Hill real estate broker and the outgoing president of the Association of Realtors, said his company currently has contracts to sell three houses. In the middle of the year, he said, "we had nothing. ... We've seen an increase in activity."

Carr, though reluctant to give much weight to the increased prices in recent months, called it "a promising sign."

But Lafakis said prices usually lag behind sales figures. Just as prices did not begin to drop for several months after the volume of sales peaked in mid 2005, they will not begin to rise until several months after the number of sales increases.

"We could see sales bottom out in the fourth quarter" of 2007, Lafakis said. "But we don't think the prices will reach bottom until the end of next year."

What keeps prices from rebounding with sales volume? Mostly, it takes time for buyers to regain confidence in the market, said Jeanne Gavish, who owns Exit Gulf Shores realty in Land O'Lakes and works in Hernando and Pasco. And buyers' reluctance will be the final obstacle to recovery, she said.

"I believe, at this point, this is a fear-driven problem," Gavish said. "Every time a national forecaster comes out and says something negative, people put their checkbooks away."

Dan DeWitt can be reached at dewitt@sptimes.com or 352 754-6116.

Snapshot of a decline

Permits issued for single-family homes in Hernando County:

2005: 4,185

2006: 2,656

2007: 796 *

* through Dec. 26

Source: Hernando County Development Department

[Last modified December 29, 2007, 18:19:01]