State's Decline In Home Prices Longest Since Great Depression

State’s Decline In Home Prices Longest Since Great Depression

By SHANNON BEHNKEN, The Tampa Tribune
Published: January 25, 2008

TAMPA - The yearlong decline in the price of homes sold in Florida was the longest since the Great Depression, and at least one group of economists is revising its target date for a turnaround in the Tampa Bay area from late 2008 to mid-2009.

Home sellers should also expect further price declines: Moody’s now predicts prices to fall another 18 percent before bottoming out.

Data released Thursday showed that sale prices of existing single-family homes in the Bay area dropped every month during 2007 when compared with the same month in 2006, and ended the year down 7 percent at $209,100. The Florida Association of Realtors, which tallied the decline, reported that December was even more grim: the median price was $194,200, a 14 percent drop from $226,800 for the same month a year ago.

“The numbers don’t look good at all,” said Chris Lafakis, an economist who covers Florida for Moody’s “Falling home prices discourage some buyers from buying, and that’s not what we need. Florida is literally drowning in excess supply right now.”

The number of homes sold slid 32 percent in December in the Tampa Bay metro area to close out 2007 with 24,215 sales for the year. That was down 35 percent from 37,190 sales in 2006.

Until recently, Moody’s predicted that the real estate market would begin a gradual rebound late this year. The economists there now expect the market to get worse until mid 2009, Lafakis said.

In the Bay area, he said, prices have dropped about 11 percent since peaking in mid-2006. He predicts they will fall by as much as 18 percent more.

“Sellers in Tampa have been reluctant to slice prices, and that’s why the inventory is so high,” Lafakis said.

The area’s condo sales suffered declines, too. The year-end median sales price was $169,400, down 2 percent from $172,300 in 2006. The number of condos sold was 5,932, down 30 percent from 8,523 sales.

Statewide, the median sales price of single-family homes was $233,600 in 2007, down 5 percent from a year ago. Sales were down 29 percent in 2007.

Nationwide, the median price dropped 1.8 percent to $217,000. For the year, sales of single-family homes were down by 13 percent, the biggest drop since a 17.7 percent plunge in 1982, according to the National Association of Realtors.

Nationally, falling property values and stricter borrowing terms could lead to more foreclosures and depress housing for most of this year, economists said. Investors anticipate the Fed will cut interest rates again next week in an effort to prevent the downturn from exacerbating weakness in the broader economy.

“There is likely to be little or no increase” in gross domestic product this quarter, Harvard University economist Martin Feldstein told the Senate Finance Committee on Thursday in Washington. “The probability of a recession in 2008 now exceeds 50 percent. If it occurs, it could be deeper and longer than the recessions of the recent past.”

Mike Larson, an analyst with Weiss Research in Jupiter, said he expects the housing market to stabilize nationally by the beginning of 2009. It may take longer, however, for Florida markets to improve.

“December was clearly an ugly way to end an ugly year,” Larson said. “But things will get better; it just takes time.”

Information from The Associated Press and Bloomberg News was used in this report. Reporter Shannon Behnken can be reached at (813) 259-7804 or