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Home Prices Keep Tumbling

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By SHANNON BEHNKEN

sbehnken@tampatrib.com

Published: October 11, 2008

TAMPA - Bay area housing prices continue to fall, largely because a big chunk of the homes selling are sharply discounted properties in distress, a new report shows.

Of homes that sold in Hillsborough, Pinellas and Pasco counties in September, 28 percent were either bank-owned or preforeclosure properties that sold for less than the troubled borrower owed on the mortgage. That's up from a mere 0.2 percent during the same month in 2005.

This is according to Tampa-based Home Encounter, a real estate consulting firm and brokerage that tracks local real estate trends.

"The distressed properties really weigh down the market," said Peter Murphy, a consultant with the company.

That's because troubled real estate sells for far less than homes in which the seller isn't under pressure. In the three-county area, nondistressed property averaged $126 per square foot. Compare that with $78 a square foot for bank-owned homes. In 2005, in the midst of the housing boom, nondistressed sales averaged $165 a square foot.

Although distressed homes sold for much less, Murphy noted that 72 percent of the homes sold in September were not listed as distressed.

"The bank-owned homes are putting an inordinate amount of pressure on conventional prices and are depressing what is otherwise a rather stable market," Murphy said.

The company uses data from the local Multiple Listing Service, which real estate agents use to advertise and track sales. The data do not include properties owners sell themselves. Properties were considered distressed if the agent labeled it as bank-owned or as a short-sale, so some properties sold cheaply may not be counted.

There's little historical data for comparison because real estate agents only recently started to tag sales as distressed.

Of the three counties, Pasco appears closest to hitting a sales price bottom, the report said. The average short-sale price in Pasco was 93 percent of the average price of a conventional home sale. In Hillsborough and Pinellas the percent was 84 and 87, respectively.

Murphy said that means prices may soon start to flatten in Pasco.

But the company doesn't expect the Tampa Bay region to see a bottom in home prices until 2010. That's largely because more distressed properties are expected to flood the market, he said.

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

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