Not a happy anniversary: Real estate bust turns 5

It's an inauspicious anniversary. Five long years ago this month, the Tampa Bay area's supercharged housing prices finally ran out of steam, and the housing bust officially began.

Prices have been free-falling ever since.

The dips have slowed, even reversed at times, but every month new data shows median home prices are far below what they were the previous year. Sales, too, have struggled to regain forward momentum.

We've become painfully aware of the drumbeat of dour housing market reports. And yet, the question we all keep coming back to is this: How far will prices fall and how long will it take for them to bounce back?

Area prices have already plummeted 46 percent. More than any time since World War II. More even than during the Great Depression, when the national average home price tumbled 31 percent.

Back then, it took 19 years for prices to recover. And get this: even though our economy hasn't been hit nearly as severely as in the 1930s, it will likely take the same amount of time for Tampa metro prices to recover from the latest downturn.

Not all economists think the turnaround will take decades, but Moody's Economy.com predicts it will be 2025 before median sales prices in the Tampa-St. Petersburg-Clearwater metro recover to the June 2006 median of $239,600. Compare that to the current median of $120,200 and consider that Moody's also expects local prices to fall 7 percent more before they begin to rise sustainably.

"It will be a long time because prices have fallen so much," said Chris LaFakis, a Moody's economist who covers Tampa Bay.

Still, the area is in better shape than others. Florida as a whole could see prices fall 10.7 percent further, much more than the national average of 4.2 percent. And prices in Detroit, which has been hit much harder than Florida, won't likely hit its peak price again until 2035.

If you think that's gloomy, just listen to Stan Gerberer, an economist with Orlando-based Fishkind & Associates Inc. He said homeowners need to quit asking when prices will return to peak levels.

"The value was never there in the first place," he said. "It's not reasonable to think prices will ever get back to those bubble prices."

Consider this example Gerberer gave. If a home was worth $150,000 in 1995 and rose to $400,000 during the boom years, it's likely worth only around $250,000 now, he said.

"It's hard to imagine a scenario where the true value of that house would ever reach $400,000 again," he said.

That's bad news for homeowners who purchased during the boom years. Foreclosures are still ticking up in some areas and economists expect it to take years to work off the inventory.

But Mark Dotzour, chief economist with the real estate center at Texas A&M, doesn't like to compare today's housing slump with the Great Depression. It shouldn't take as long for the overall economy to recover as it did 70 years ago because unemployment isn't nearly as high, he said.

Unemployment was as high as 25 percent back then and is now hovering around 9.1 percent. Tampa Bay's unemployment rate is 10.5 percent.

"The magnitude of the situation isn't even comparable," Dotzour said. "But the housing market is certainly in distress because of the massive job loss we have had."

However, Dotzour is more optimistic than Moody's.

"I think people are way oversold on the notion that housing isn't coming back," he said. "Americans get carried away. We think whatever has happened in the past 24 month will go on forever."

The real estate market's problems are largely attributable to the way the government has handled the downturn, Dotzour said. He points to bailouts and the home buyer's tax credit, which he says just prolonged the recovery.

"It can't possibly take 19 years for prices to recover," he said. "I have faith that our government will figure it out before then."

As painful as it is for people to lose home, Dotzour said the market won't improve until foreclosure homes are resold.

"All these people who lost their homes will have to rent somewhere," he said. "There's nothing wrong with that. That's the way America has always worked."