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Home Prices To Dip, Report Says

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By SHANNON BEHNKEN, The Tampa Tribune

Published: September 20, 2007

TAMPA - Bay area home prices have held relatively steady so far, despite a nationwide housing downturn. But get ready: a new report suggests that prices here may soon falter.

The median home price in the Tampa, St. Petersburg, Clearwater area will drop about $20,000 more by the third quarter of 2008 when the market bottoms out, according to a recent analysis by Moody's Economy.com.

The area's median home price already has dropped 2.7 percent since its peak in late 2006 and hovered at $222,000 in the second quarter of 2007, said Pat McPherron, an economist with Moody's.

That median, the point at which half the homes sell for more and half for less, will fall to $202,000 in the Tampa-St. Petersburg-Clearwater area before prices start to rise again, according to the report. If that happens, it means prices here will have declined nearly 12 percent over a nearly two-year period, Moody's forecast says.

'Unlike a lot of other cities, most of the Tampa area's drops haven't happened yet,' McPherron said.

The forecast ranks 100 metropolitan areas by projected price decline from the peak of those cities' housing markets until the point at which Moody's thinks that market will bottom out. Twelve Florida markets made the list, including two in the top five.

Moody's predicts that three-quarters of the nation's metro areas will see home price declines over the next three years and that many will suffer double-digit drops when measuring from that market's peak.

One of the nation's most severe price declines is expected for the Sarasota-Bradenton-Venice area, which was ranked third-worst nationwide in the 100 metro markets outlined by Moody's. Homes there are expected to have dropped about 25 percent in value from that market's peak in the first quarter of 2006 to its projected low point in the third quarter of 2008, according to Moody's forecast. Sarasota-Bradenton would have to show median price declines of an additional 9 percentage points to reach that 25 percent estimate, McPherron said.

The other Florida area in the top five was the Palm Bay-Melbourne-Titusville market, where Moody's predicts a 25 percent total drop.

Compared to those numbers, the Tampa area looks good, said Carlos Fuentes, president of the Greater Tampa Association of Realtors. The Moody's report could be positive for the local housing market, he said, because it could serve as a wake-up call to sellers.

'It's a buyer's market,' Fuentes said. 'Buyers will see the report and decide to wait until prices drop, but if sellers go ahead and drop their prices now, they may be able to make a deal.

'If you're a buyer, this report could be a negotiating tool.'

Even though Tampa's prices may drop more in the coming year, Fuentes said the nearly 12 percent total decline Moody's predicts shows that prices haven't been all that much out of proportion.

Nationally, median homes prices are projected to drop an average of 7.7 percent before prices rebound. Florida and California had the most cities on Moody's list, with 12 and 17, respectively.

The economists at Moody's looked at projected employment and wages to determine when markets will bottom out. However, in Florida, McPherron said, the housing market depends more on economic conditions in the rest of the nation than the state's own employment and wages.

That's because so many people in other areas of the country move to Florida to retire, McPherron said. That's the same reason, he said, that Florida's housing market is hurting.

'People from all over the country were speculating in Florida, assuming that the prices would increase,' he said. 'Many thought they could flip for more money because so many people want to retire there.'

Reporter Shannon Behnken can be reached at (813) 259-7804 or

sbehnken@tampatrib.com.

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