The words land in the gut like a combination punch: double dip.
We're not talking about a double smear of a creamy crab spread or multiple plunges in a heated swimming pool. We're talking about whether the slumping Tampa Bay housing market, which eked out a modest recovery in 2009, will relapse in 2010.
Evidence of early 2010 home price declines are causing jitters. Florida Realtors reported an 11 percent price plunge in the Tampa Bay area from December to January. The S&P Case-Shiller home price index, more or less Wall Street's examination of our local housing market, reported a stiff price correction of 11 percent from December 2008 to December 2009. Reports of housing depreciation from the Greater Tampa Association of Realtors were no more encouraging.
This wouldn't be the first real estate leveling nudged off a ledge by an uncooperative economy. Two different credit crises squelched murmurs that the market was improving in the summers of 2007 and 2008. This year the forces arrayed against recovery are legion:
Foreclosures and mortgage defaults: We've reported before that nearly one in six Tampa Bay area mortgages are at least 90 days in arrears. But another batch of local homeowners could face trouble when so called Alt-A loans — a category for moderately risky borrowers between subprime and prime — default in greater numbers. Adjustable rate mortgages fixed for three and five years reset by the thousands this year. Bank-owned homes usually sell for massive discounts.
Withdrawal of government subsidies: Home buyer tax credits of $8,000 and $6,500 expire in two stages on April 30 and June 30. Economists credit the credit for rising home sales last year. How will the market react to the removal of the credit? Who knows. But if it served as a price support, you can expect prices to slip.
Slowly rising mortgage rates: The Federal Reserve is gradually withdrawing the financial props that have kept mortgage rates at record lows. Economists expect rates to creep up from about 5 percent to 6 percent this year. For a typical Tampa Bay area home buyer, that inflates monthly payments at least $100. That could mean the difference between affordable and not affordable.
Record low housing construction: As a group, Tampa Bay area home builders had their slowest year on record in 2009. They predict this year could be worse. On the one hand, less home construction means fewer houses to compete against existing inventory. That should prop up prices. But we're ignoring the thousands of construction workers put out of work.
Crippling unemployment: Tampa Bay area unemployment reached 13.1 percent in January. Just four years ago, in the midst of the construction boom, the local jobless rate was 2.9 percent. In Pasco County, where over-construction reigned and foreclosure homes cover the ground like so many palm fronds, unemployment is approaching 15 percent. Business confidence is sputtering, thanks in part to the federal government. Politicians are so focused on the important but secondary issue of health care expansion that job creation has suffered. Small businesses fear health insurance mandates will accelerate outsourcing. Fewer jobs, fewer homes sold. It's that simple.