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Sharks await big meal but may go away hungry

More than a couple of e-mailers to the newspaper can't discuss the recent housing plunge without cackling with pleasure. Okay, so I can't hear them cackling, but that's the tone of their messages.

By James Thorner, Times Staff Writer
Published January 7, 2008

More than a couple of e-mailers to the newspaper can't discuss the recent housing plunge without cackling with pleasure. Okay, so I can't hear them cackling, but that's the tone of their messages.

Some salivate at the prospect of scooping up cheap houses from chumps who rashly bought at the housing peak. They'll wait for the Great Meltdown and then come in to sop up the drippings. Some even predict a return to three-bedroom, two-bath houses in the suburbs for $88,000.

They've got some support for their schadenfreude. In the past 18 months, the Tampa Bay area's median home price has dropped 21 percent, from $239,600 to $189,100. Naples, where median prices topped $500,000 in the fall of 2005, watched prices plunge to $415,000 a year later before shell-shocked Realtors stopped publishing the data.

These aren't selective statistics gleefully gleaned from an I-Told-You-There's-a-Housing-Bubble Web site. They come straight from Florida Realtors themselves.

But I can't escape the feeling that this particular brand of bottom feeder is doomed to be disappointed. When it comes to housing, what goes up just doesn't seem to go down, at least not permanently.

People have moaned about the ridiculously high price of California real estate since Charlie Chaplin was the king of Hollywood. But after several real estate booms and busts, you still struggle to find a house in San Francisco for less than $750,000.

Remember Massachusetts? The high cost of living was supposed to finish off a state dubbed Tax-a-chusetts. The last one to leave Boston, please turn out the lights. But home sellers still easily collect more than $500,000 for modest homes in the Boston 'burbs.

You can say we're neither California nor Massachusetts, so those rules don't apply to us. True. But neither are we Flint, Mich., or Midland, Texas, where our fortunes are tied to the fickle fortunes of an automobile or oil industry.

In the early 1980s, our home prices hovered around $50,000. In the early 1990s, despite a decade of high interest rates on mortgages, homes were worth about $75,000. By 2000 our median home price topped $100,000. Even then we were still undervalued compared to other cities in the Sun Belt.

Prices appreciated fairly normally until the insane run-up between 2004 and 2006. Inasmuch as speculators drove up the median home price to its $239,600 peak in June 2006, we need to see a correction. We've already seen part of that correction.

But don't expect a steal of a deal on every block. Subtract the speculators and inflation runs about 3 percent a year. Incomes have climbed over the years in Tampa, albeit slowly. Tens of thousands of people are locked into homes bought at boomtown prices. They won't give away their money without a struggle.

I have a name for house hunters counting on a return to 1998 prices: lifelong renters.

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

[Last modified January 4, 2008, 20:37:39]