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Square-footage formula shows housing bottom beckons

By By James Thorner, Times Staff Writer
In print: Friday, June 13, 2008

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When rating the housing market, we talk about the "Tampa Bay area." But our geographical shorthand is shortchanging what's really going on.

As a corrective, here's a little numerical quiz: 155, 124, 97. It's not the Pick 3 Lottery.

The first represents Pinellas County, where homes sell for an average of $155 per square foot. The second is Hillsborough County, where homes go for $124 per square foot. Pasco County's homes sell for $97 per square foot.

Land scarcity and amenities account for most of the price differences. Pinellas is built out and boasts the beaches. Hillsborough's South Tampa-to-Carrollwood core oozes exclusivity. And Pasco has built its reputation as an affordable bedroom community built atop cheap land.

But the numbers could also be telegraphing the end of the housing slump, according to Home Encounter LLC, a Tampa real estate brokerage. The Tampa Bay area's median home sales price is down about 25 percent from the 2006 peak. The weakness of that number is its failure to separate falling prices from a surge in sales of small homes. In other words, have owners of 2,000-square-foot houses slashed prices? Or have buyers flocked to 1,500-square-foot homes?

Home Encounter dissected the square-footage numbers and purports to know when home prices will hit bottom in each county. Based on market trends, Pasco's price floor is supposedly $93 per square foot. Since it's $97 today, Pasco should reach its floor in October.

Pinellas buyers can support a square foot price of $144, $11 less than today's price. Home Encounter predicts the price bottom will come in November. That leaves Hillsborough in the problem column. Home Encounter justifies a price floor of $105 per square foot, well below today's $124. Trends suggest prices won't hit bottom until March 2010.

How good are these guys at the prognostication game? We'll know by fall whether or not their crystal ball has cataracts.

James Thorner can be reached at thorner@sptimes or (813) 226-3313.com.