This Tampa real estate company predicts a further decline in Tampa Bay home prices in early 2010. The reason? An increase in the number of sales contracts for foreclosure and pre-foreclosure homes:

Pending home sales for December are out, and they suggest that we could be in for another round of steep declines in home values as we enter 2010.

Home Encounter announced today that 61% of all pending sales are short-sales, priced at an average of 5.5% below current sales prices; 7% of pending sales are foreclosures – priced at an average of 38% below current sale prices. Together, these “distressed” sales account for 68% of all pending sales in Tampa Bay, and they’re priced at an average of 8.5% below current sales prices. 

“We have 8,700 pending sales on the books in Tampa Bay” commented Peter Murphy, Home Encounter president. “Almost 70% of these homes were priced at 9% below current sale prices when they went under contract. When they eventually sell 30-90 days from now, the final price could be even lower.”  

Home Encounter’s research represents a sobering twist to the monthly increase in pending home sales that we’ve experienced in Tampa Bay since early 2009. “The fact that pending home sales are up has gotten lots of attention,” commented Murphy, “but these pending sales are massive numbers of distressed properties that are selling at such low prices that they have the power to singlehandedly depress home values well into 2010.”  

Home prices have declined by 39% over the last 2 years, according to Home Encounter. If pending sales do in fact force home prices down by another 9% in 2010, then we could be looking at an average price decline in Tampa Bay of over 50% by the time that this housing crisis is over.

UPDATE: I should have mentioned this when I posted Friday. Pending home sales might not be the best measure of future price. A broker source of mine said his pending list is made up mostly of short sales. But at the end of the month, owing to the slow pace of bank approval, only about a quarter of closings end up being short sales. In other words, these aren't traditional pending sales. You can't expect them to follow the usual 30-60 day closing schedule. That should help soften the blow to median/average home prices.