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Counting The Cost

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By SHANNON BEHNKEN

sbehnken@tampatrib.com

Published: November 16, 2008

TAMPA - The Tampa Bay area's falling home prices - and perceived bargains - are slowly luring buyers back into the market.

But one lingering question still keeps many on the sidelines: If prices continue to drop, could buyers soon owe more on their mortgage than the house is worth?

"The biggest factor is no one knows if we've hit bottom yet, so buyers are hesitant to act," said Denis Romero, a real estate agent with Coldwell Banker Residential Real Estate.

A new study offers some hope.

The Bay area is out of its housing bubble, and today's buyers have a reasonable expectation for building home equity by 2012, according to a joint analysis by the Center for Economic and Policy Research and the National Low Income Housing Coalition.

"You now have a much better reason to believe you can have equity in your home in Tampa than in other markets," said Danilo Pelletier, research director for the study.

The analysis looked at the cost of owning a home compared with the cost of renting in the 100 top metropolitan areas. The October study determined that owning an average home in the Bay area would cost about $1,052 in monthly mortgage and expenses, such as utilities. Renting a two-bedroom apartment or home, on the other hand, would cost about $890 in monthly expenses.

In comparison, the group's May report showed the monthly cost of owning a home was estimated at $1,150, and the cost of renting a two-bedroom unit was $833 a month.

Pelletier says this shows that owning a home is getting more affordable in the Tampa Bay area and that the artificial housing bubble has popped.

"Housing prices and rents aren't that far out of whack, and that's a good thing for buyers, especially first-time home buyers who are trying to decide whether to rent or buy," he said.

If this trend continues for the next four years, the report says, today's buyers can expect to have about $57,526 in equity by 2012. That's up from May's projection of $40,237.

This is good news for buyers on the fence, said Deborah Farmer, president of the Greater Tampa Association of Realtors.

"If you take the short sales and foreclosures out of the market, we have a strong, stable market," she said.

But Romero, the Coldwell Banker real estate agent, said he's not as encouraged because buyers continue to have trouble obtaining financing.

"Even though the difference between renting and owning is pretty close now, that doesn't mean buyers can necessarily buy the home," he said.

The credit crunch is keeping many from buying homes, said Chris Lafakis, who covers Florida for Moody's Economy .com.

He said that while the new rent study offers hope in the long run for people buying in this troubled real estate market, prices will likely continue to fall in the short term.

Housing prices have already fallen 19 percent since prices started dropping in mid-2006, Lafakis said. Moody's predicts prices will drop another 29 percent and won't hit bottom until late 2009.

"We still need to see house prices fall in order to get equilibrium," he said. "From our perspective, houses are still overpriced in the Tampa area."

That may be true, Pelletier said, but one thing he's sure of is this: the local housing market is improving and is no longer in a bubble. If prices continue to fall, he said, it won't be to correct a housing bubble.

"Housing prices fall for a lot of different reasons," he said. "If they fall in Tampa now, it's likely because of job losses and the overall economy."

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

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