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Tampa Bay area builders say things really aren't that bad

Sure, people are buying homes out there.

Like who? Well . . .

Like divorcing couples. A split means at least one of the former spouses needs a new home. Maybe both, if they sell the marital home and split the proceeds.

Like downsizing older couples. Maybe they need to sell the family home to finance a child's college education. Or it's just too much space or too much maintenance and they're ready for something smaller.

Like corporate and military transferees. Often they're the ones who want to buy what's called an inventory home: a house that's finished, or nearly so, that they can move into quickly. They don't want to wait nine to 12 months to design and build a home from scratch. They want a place they and their families can get into soon and get settled.

And who's not in the market anymore? Investors and flippers, those wonderful people who that has scorched virtually everyone to one degree or another.

That snapshot of the Tampa Bay housing market comes from Jim Deitch, executive vice president at Southern Crafted Homes. The 18-year-old company, which is based in Land O'Lakes, currently builds about 100 homes a year, priced from the $200,000s to more than $700,000, in four communities around Tampa Bay.

Deitch joined several other area builders at a media roundtable last week put on by the Tampa Bay Builders Association. The purpose, according to organizer Brenda Kunkel, was to open up communications between builders and the media. That meant there was a certain amount of urging on their part that reporters look at the positive news out there.

And there is some:

Southern Crafted, for example, reported sales up 31 percent in the first quarter of this year, compared with the same period in 2007.

Centex sold 77 homes in 75 days from December through early March.

One sales rep for Standard Pacific Homes, Blucher Bridges, sold 20 homes in the first five months of this year at Seven Oaks in Wesley Chapel, and 300 homes since 2002.

Other builders at the informal chat-around were Reed Williams, vice president for sales in the Tampa division of Pulte Homes; Charley Hannah of Hannah-Bartoletta Homes; Terri McGinniss of Crown Community Development (Seven Oaks and Wiregrass Ranch in Wesley Chapel); and Deitch's boss, Kurt Hull, president and chief executive officer of Southern Crafted.

The feeding frenzy of sales that started in 2004 was fun while it lasted, but the builders say they don't miss having to turn away buyers, or breaking up fistfights among buyers who literally camped out overnight when a few new homesites were to be released.

The chilly market has meant "we've had to more tightly define who we are," Hannah said. Sometimes that means saying no to opportunities. Lots of developers are desperate to unload homesites these days, "and the sellers — and often that means the banks — want you to do projects that aren't aligned with your company," he said. Just because the property is for sale isn't a good reason to buy, no matter how low the price.

He acknowledged that there are "marginal communities" out there where prices may drop further. They aren't necessarily the best places to build or to live, but "you could get them permitted and built fastest" a few years ago.

Williams agreed. "The far-flung developments are the 'B' locations," he said.

Deitch made it three on a theme. "People are now looking at the total cost of their home purchase. That's why the State Road 52 corridor'' in Pasco ''is dead. People look at insurance, taxes, gas, the time to commute, the total cost of living. The best price isn't always the best value."

He thinks buyers are seeing "a perfect storm" of opportunity: The cost of building materials is rising at 4 percent to 8 percent a month, he said; builders can hardly raise their prices under the current circumstances; and interest rates are close to historic lows.

The builders repeatedly said that the drop in home prices means some people can afford to buy now who otherwise could not. That's true. Interest rates are 2 percentage points lower now than they were in 2000 for a 30-year, fixed-rate mortgage.

Williams cited a Pulte model in Manatee County that once sold for $260,000 and now is priced at $180,000. Hey, if a builder can take a 30 percent hit on a house and still be happy, maybe we should all raise a glass to affordability, sign the contract and rejoice that we got a great deal.

But the drop in values means some people owe more than their homes are worth, and others are struggling with wacko mortgages that adjusted beyond their ability to pay. Some people just aren't financially capable of being homeowners. And there's still way too much inventory in the market.

Around the table there was agreement that when the monthly statistics come out reporting that housing starts are down yet again, that should be viewed as good news. It means builders aren't starting construction on yet more homes they can't sell and instead are concentrating on working through the backlog.

The builders made their comments on a day when the stock market plunged 360 points, which nobody can spin into a positive. That same day, the Florida Association of Realtors reported that sales of existing homes in the Tampa Bay area rose 1 percent in May compared with a year ago (okay, that's good) . . . but the median sales price dropped 16 percent year to date.

The builders encouraged journalists to report local statistics, not broad-brush the Tampa Bay area with national stats that may not apply here. Point taken; now you have 'em.

So builders wait for all this to settle out, for inventory to drop, the mortgage market to find its feet and consumer confidence to come back.

The shakeout, Deitch said, is "like a forest fire. People think a forest fire is damaging, but it's actually healthy. It clears out all the garbage and mess and allows healthy new growth afterward."

Judy Stark can be reached at jstark@sptimes.com or (727) 893-8446.

Tampa Bay area builders say things really aren't that bad 07/07/08 [Last modified: Monday, July 7, 2008 12:39pm]
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