Tampa Bay Real Estate Prices Still Too Pricey According To Economists
My friend and fellow real estate agent Dave Heideman has been a keen observer of Tampa Bay employment levels for quite some time now and has made many suggestions that have found their way into the stories in this blog site. Dave has sent me numerous e-mails in which he points out that real estate prices in Tampa Bay remain too high because of the area's high level of unemployment, low level of average income, low rental rates and questionable mortgage and banking practices.
Dave is quick to point out that people who don't have jobs, or are in fear of losing the job they have, don't (or can't) take out a mortgage and buy real estate. It's just not the prudent thing to do. Dave is also quick to point out that people whose incomes are low simply can not afford to buy real estate at the inflated prices being asked by many sellers who mistakenly purchased their now-for-sale property at the top of the market in 2005 or 2006.
This all makes sense if you think about it, and some deep-thinking economists have recently reinforced Dave's point of view.
Mark Vitner, an economist with Wells Fargo bank, was quoted in the St. Petersburg Times as saying that a "jobless recovery" may start in 2010, but that jobless recovery will keep home sales tame because employers won't rush out and start hiring lots of new employees next year. So, same old story -- no new job, no new house.
Vitner predicted an additional overall 4.5% decline in home prices next year around Tampa Bay, but stressed that neighborhood price declines could be significantly more due to the local nature of property values within specific neighborhoods. In some neighborhoods, prices might decline 20%, in others 60% -- it depends on the neighborhood.
Another economist, Mark Zandi of Moody's Economy.com, points out that Tampa Bay home prices are overvalued and probably won't bottom until mid-2010. He says that continued high unemployment, competition from low priced distressed properties and foreclosures, and rising mortgage rates will further depress prices as we head into next year. Zandi said flat-out that Tampa Bay area homes, when measured against local income and rental rates, are priced too high. Period. No ifs, ands, or buts about it.
Sellers of real estate and their agents need to keep these factors in mind. In order to sell any product including real estate, you have to offer it to people with the income and credit necessary to complete the purchase. Given the current recession, job losses, and generally low incomes found in Tampa Bay, sellers need to price property at a point where the "average Joe" can afford to make the purchase. Pricing houses like this is California or New York City is just a waste of time because most people here don't have that kind of income.
Dave is quick to point out that people who don't have jobs, or are in fear of losing the job they have, don't (or can't) take out a mortgage and buy real estate. It's just not the prudent thing to do. Dave is also quick to point out that people whose incomes are low simply can not afford to buy real estate at the inflated prices being asked by many sellers who mistakenly purchased their now-for-sale property at the top of the market in 2005 or 2006.
This all makes sense if you think about it, and some deep-thinking economists have recently reinforced Dave's point of view.
Mark Vitner, an economist with Wells Fargo bank, was quoted in the St. Petersburg Times as saying that a "jobless recovery" may start in 2010, but that jobless recovery will keep home sales tame because employers won't rush out and start hiring lots of new employees next year. So, same old story -- no new job, no new house.
Vitner predicted an additional overall 4.5% decline in home prices next year around Tampa Bay, but stressed that neighborhood price declines could be significantly more due to the local nature of property values within specific neighborhoods. In some neighborhoods, prices might decline 20%, in others 60% -- it depends on the neighborhood.
Another economist, Mark Zandi of Moody's Economy.com, points out that Tampa Bay home prices are overvalued and probably won't bottom until mid-2010. He says that continued high unemployment, competition from low priced distressed properties and foreclosures, and rising mortgage rates will further depress prices as we head into next year. Zandi said flat-out that Tampa Bay area homes, when measured against local income and rental rates, are priced too high. Period. No ifs, ands, or buts about it.
Sellers of real estate and their agents need to keep these factors in mind. In order to sell any product including real estate, you have to offer it to people with the income and credit necessary to complete the purchase. Given the current recession, job losses, and generally low incomes found in Tampa Bay, sellers need to price property at a point where the "average Joe" can afford to make the purchase. Pricing houses like this is California or New York City is just a waste of time because most people here don't have that kind of income.
-30-
posted by Terry Ward at 4:19 AM
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