Tampa Home Prices Plummet in June

Posted on July 8, 2008

Home prices in Tampa Bay plummeted 3.8% during June, falling almost 19% from June 2007 and eradicating the modest home price gains from the three months prior that had some proclaiming the end of the housing market decline. That’s according to Home Encounter’s Residential Real Estate Report for Tampa Bay, released today.

At first glance, the data is misleading: The number of home sales in June increased by 7.5%, consuming just over 2.5% of the total inventory of available homes for sale in Tampa Bay. Although this appears promising, Home Encounter analysis shows that the up-tick in sales was accompanied by an almost 4% decline in sales prices, a 4% increase in the number of days to a sale, a 2% decline in asking prices for homes, and a 1.5% increase in the time a property has been on the market.

It’s good when homes sell, but it’s not good for overall market health when they sell so cheaply,” commented Peter Murphy – Home Encounter CEO. “Home values are determined in part by what buyers are willing to pay. When sale prices fall, the Market is sending a clear message that it thinks homes are worth less than they were in months prior. An increase in the volume of sales at lower prices only reinforces this message.”

What Murphy is referring to is the primary method used by Real Estate Appraisers to determine the value of a residential property, and it’s referred to as the Comparable Sales Method. This Method states that generally speaking, your home is worth no more than what homes in your immediate vicinity are worth, and “worth” is determined by recent sales. So if similar homes in your neighborhood have sold during the last 3-to-6 months for $200,000, your home is worth no more than $200,000 – and possibly less since market values are declining.

The good news is that even with the influx of foreclosures, bank-owned homes and short-sales, there are a limited number of dirt-cheap homes for sale. As the rate of sales increases, it won’t be long before the supply of low priced homes is consumed, in which case buyers will have to pay more if they want to purchase a home.

But as Florida continues to rank at the top of the charts for foreclosures, and as prices continue to fall, it will be some time before we see an end to value-declines. June’s data pushes back Home Encounter’s projection of the bottom of the real estate market to March 2009 with values that are 5.5% below where they are today. “We would love to focus only on the increase in sales volume and use it to say that we’ve hit bottom,” commented Murphy, “but as long as prices continue to fall, “the housing market has not yet started to recover.”

For a free copy of the Home Encounter Residential Real Estate Report for June, go to http://homeencounter.com/learn.php and click on the link to the June 2008 Residential Real Estate Report.

Peter Murphy is Co-Founder and Head Broker at Home Encounter, a Tampa-based real estate Consultancy with specialties in Residential & Rental Properties, Investment Real Estate, Property Management and Land & Commercial Properties. Murphy’s analysis of the Tampa Bay housing market is featured extensively in local media and in trade publications, including the St. Petersburg Times, the Tampa Tribune, the Tampa Bay Business Journal, the Lakeland Ledger, and the Orlando Sentinel. He has appeared on ABC Action News and Bay News 9 for his reporting on significant local developments in the real estate market. He is a regular contributor to Fox’s 970 WFLA news broadcasts and is a guest panelist on Fox 13s “Your Turn”, where he consults on local and national real estate market issues. Murphy has a B.S. in Economics from the University of South Florida and an MBA with an emphasis in Finance, Economics and Marketing from the University of South Florida School of Business. He resides in Tampa with his wife and child.