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Letter to the editor

Annual forecast has little to cheer builders

There is not much good news in an assessment of the economy's effect on homebuilding in the Tampa Bay area.

By Judy Stark, Times homes and garden editor
Published January 12, 2008

SAFETY HARBOR - There weren't a whole lot of smiling faces this week around the Safety Harbor Spa when housing analyst Tony Polito gave his annual economic forecast for the Tampa Bay Builders Association.

And that was before Polito spoke.

Almost nobody ate their tiramisu dessert, which was either a reflection of post-holiday diets or of the generally downbeat atmosphere. What builder wouldn't be gloomy, given the miserable housing climate: inflation concerns, high energy prices, the credit crunch, declining new home sales?

Just one nugget from the many numbers Polito offered in his PowerPoint presentation: Ideally, the Tampa Bay market has enough homesites available to last 18 to 24 months. Currently, there are enough to last 40 months.

"My mother always told me: If you can't say something nice, don't say anything at all," Polito began. "Any questions?"

Polito is director of the Tampa Bay region for MetroStudy, which compiles housing statistics nationwide. He offered these observations:

- The median home price in this area is $190,000. The median price in Dallas is $160,000. Texas has no income tax and lower insurance rates and a perception not necessarily borne out in fact that the weather is better there. There's your competition for the modest-income potential buyer.

- Typical income around here is $50,000-$55,000. Some builders are already doing whatever they can to push prices down to what those buyers can afford, typically three times their annual income, hence $165,000 or so.

- The presidential campaigns will spend $1-billion in advertising over the next 11 months "telling everybody how bad things are. After a while some people may start to believe it." Consumer confidence started to slip after September, traditionally a high point when people heave a sigh of relief that we've survived another hurricane season.

- The problem isn't mortgage interest rates, which are currently around 6.1 percent, a good rate by any measure. "It's the ability to qualify," Polito said, given the tightened credit measures in the wake of the subprime meltdown.

- Typically buyers fall into one of two categories: those who have decided they want to buy a resale home, and those who are interested only in new construction. But the pool of undecided buyers - those who haven't decided what they want - is larger than those who have. That's the pool builders and their sales staffs have to go after.

- "We need to get back to the 2003 mind-set," he said, before the crazy, overheated, go-go market of the last four years. "We need short-term amnesia." Forget about exotic mortgage products, no documentation, absurdly low teaser rates, lotteries and overnight camp-outs to buy homes, "amateur investors" who bought houses they can't afford to keep but can't flip.

"The bottom line is that we'll be a demand-driven market for another 12 months," Polito said. "We're not at the bottom yet but we're getting closer. Sales and marketing are the keywords for '08. You've got to excite the buyer and create the sense of urgency."

Some potential Florida buyers may be awaiting the outcome of the Jan. 29 vote on the proposed constitutional amendment that would, among other things, allow for portability of the tax cap on residential real estate, Polito said.

Why buy now, the thinking goes, before portability, which means I'll get whacked on taxes on my new home? Wait until we see if it's going to come to pass, and if it is, then I'll buy and protect myself.

Despite Polito's comments - which essentially confirmed what everyone in the room already knew - some of the builders were putting a game face on. Mike Bartoletta, of Hannah Bartoletta Homes, said the houses he's building these days "are flying" - lots of subcontractors, few distractions, moving rapidly toward completion. Hannah Bartoletta plans to expand this spring into Sarasota, where there are plenty of subs eager for work and a speedy permitting process, he said.

And Doug Tripp of Tripp Trademark Homes said he just got back from a ski trip. "If you're going to be on a slippery slope," he said, "it might as well be in ski country."

Judy Stark can be reached at jstark@sptimes.com or (727) 893-8446.

[Last modified January 10, 2008, 18:47:48]