Tampa foreclosed homes for sale will continue to push prices down in the Tampa Bay area, based on statements from economists who participated in a conference held by the National Association of Home Builders last week.
The economists said that high unemployment levels and increasing mortgage rates, in addition to high number of foreclosure homes, will continue to depress home prices in the coming months and in 2010.
They also said that homes in the area are still overvalued, so prices are expected to fall further and will not bottom out until the early or middle months of next year.
As of the end of August, home prices in the Tampa Bay Area have dropped by 40 percent since their highest level in the middle of 2006.
According to Moody’s economist Mark Zandi, the median home price in Tampa Bay, which has hovered around $140,000 over the past 12 months, could decrease by 10 percent more.
Zandi said that Tampa Bay homes are overvalued, when compared to rental rates and local income. To compare valuation, he said that homes in the Boston and Washington, D.C. corridor are significantly overvalued while homes in the Orlando and Sarasota area are undervalued. He explained that Orlando and Sarasota have higher income levels than the Tampa Bay area.
The economists cited many factors for the continued home price depression, including the still large number of Tampa foreclosed homes for sale and job losses. They said they expect more foreclosures next year because of continued defaults. More than one third of homeowners who have recently modified their loans are expected to redefault.
Eric Isenbergh of Davison Homes said he has stopped building homes in 2007 and will not restart building until the current unemployment rate of 11.7 percent goes down. He said that without recovery in jobs, there is no recovery in the housing market.
Wells Fargo economist Mark Vitner added that even if the national economy recovers, home sales will not grow substantially because many are still jobless. He said that businesses will not hire as they start to recover.
According to Vitner, home prices will continue to fall further by 4.5 percent, but explained that there will be variations in price depressions in neighborhoods. He explained that overall home prices in Tampa have fallen by 40 percent, but prices have dropped by 20 percent in some neighborhoods and by 60 percent in other neighborhoods.
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