Home prices now affordable, but fear keeps many from buying

Every time you hear someone say "I got a great deal on that place" - they bought it when headlines read like this...


Home prices now affordable, but fear keeps many from buying

TAMPA – Aug. 17, 2009 – Homes haven’t been this affordable in decades. Real estate agents have plenty of business. Desirable properties can be had for less than half the price of two years ago.So why aren’t sales booming? Fear.

“I had a deal fall through the week before closing because the buyer lost his job,” said Joe Perez, a real estate agent with ERA The Polo Group in Tampa.

People worry about losing their jobs in this economy, worry values will continue to freefall. Primarily, first-time homebuyers and investors are buying. The first group is motivated by a government incentive. The last by the desperation of sellers of distressed properties.

Home prices in the Tampa Bay metro area are more affordable now than they have been over the past 20 years, according to Moody’s Economy.com. The median home price in the Tampa-St. Petersburg-Clearwater metro area was $139,400 in June, down 22 percent from $178,700 during the same month last year.

A bright spot this week came in a report from the Florida Association of Realtors. Sales of existing homes for the most recent quarter shot up 24 percent in the Tampa-St. Petersburg-Clearwater area compared with a year ago. But prices continued to slide, with the median price falling to $137,000.

Industry watchers say brand-new homeowners are to thank. First-time homebuyers are taking advantage of the deals, which include an $8,000 government tax credit. Home sales were up 21 percent. There were 2,848 sales of existing homes in June, up from 2,346 a year ago. But given how affordable homes are now, sales should be much higher, said Chris Lafakis, an economist who covers the Bay area for Moody’s. There are still tens of thousands of for sale signs dotting lawns across the Bay area.In the first quarter of 2009, Moody’s affordable housing index for the Tampa area was 195.7. That means that a family making a median income of $58,000 could afford to buy a home for nearly double the median home price. (The median home price for the area was $142,000 during the first quarter.) The area’s affordability index reading has never been higher since Moody’s started tracking the index in 1973.

For perspective, consider the second quarter of 2006, when the index peaked at 94.6. “Affordability has nearly doubled since the peak of the housing market.”

“Given the prices, more people should be buying,” Lafakis said. “Consumers expect home prices to go down more, so many won’t buy.” Also, Lafakis said, buyers are concerned about the overall economy. Unemployment is expected to keep rising until the second quarter of 2010, when Moody’s expects it to hit 12.9 percent.

Jack Rodriguez, president of the Greater Tampa Association of Realtors, said real estate agents are hopeful that sales are rebounding. Many are swamped with business, especially distressed properties. Those sales are dragging down prices, he said, which translates to bargains for buyers.

“Prices haven’t been this low in a very long time,” he said.

Nancy Otten, a real estate agent with Keller Williams Tampa Properties, said she’s been amazed to find apartment-to-condo conversions for as low as $20,000 a unit.

Deals abound even for more expensive homes, Perez said. He pointed toward a 2,400 square-foot home with a pool in the North Dale neighborhood of Tampa. It’s in excellent condition, and the price is just under $200,000. A condo on Clearwater Beach (with a water view) is for sale for just under $300,000. Units like it sold for between $700,000 and $800,000 during the housing boom, Perez said.“I’ve been in this business for 28 years, and some of these prices are lower than when I started,” he said.

Even so, Perez said he’s hearing from worried buyers who don’t want to miss out on good deals but also don’t want to get in over their heads.

“Confidence is a problem, but I think that will go by the wayside if prices start going back up again,” he said. “You’ve gotta take a chance sometime in life.”

Copyright © 2009 Tampa Tribune, Fla., Shannon Behnken. Distributed by McClatchy-Tribune Information Services.