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Housing slump spares few Pinellas neighborhoods

By James Thorner and Matthew Waite, Times Staff Writers
In print: Sunday, August 24, 2008

The Euclid-St. Paul neighborhood in St. Petersburg has held much of its value.

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ADVERTISEMENT MARTHA RIAL | Times photos Related Links Got equity? Check out local home sales trends with Neighborhood Watch Story: In Pasco, location key to amount of home value drop

This spring, Wayne Croushorn and Stephen King sold modest-sized investment houses less than 2 miles apart in central St. Petersburg. Despite the proximity, though, you might as well be comparing housing markets in Alaska and Alabama.

Croushorn bought a 1,300-square-foot bungalow on 14th Street N in the Euclid-St. Paul neighborhood for $131,000 in 2004. He managed to sell it for $171,500 this April, a gain of 30 percent.

King wasn't so lucky. He snatched up a 900-square-foot concrete block house in June 2007 for the recorded price of $89,900 in southern St. Petersburg's Bartlett Park area. This spring he let it go for $77,000, a 14 percent price decline in less than a year.

"It was a house we probably shouldn't have bought," King said in hindsight.

In the prolonged housing slump, few neighborhoods in Pinellas County have been immune to falling prices and sales. Single-family home sales are off about 75 percent from their peak in late 2004, dragging overall prices down about 10 percent from their highs in 2005-2006.

But the pricing pain isn't shared evenly among the 186 neighborhoods surveyed by the St. Petersburg Times. An analysis of about 60,000 home sales between 2004 and 2008 — from Tierra Verde to Tarpon Springs — shows that some neighborhoods have sunk beneath the waves while others have trimmed sails and weathered the typhoon.

Low- to moderate-income places like Bartlett Park and Highland Oaks in St. Petersburg and southeast Clearwater recorded home price declines of about 40 percent from the peak.

But higher-than-average price declines are also the scourge of upper-income enclaves like Venetian Isles and Snell Isle, where the median home price has dropped from about $1-million to less than $600,000 this year.

A tiny handful of neighborhoods — Lake St. George in Palm Harbor and Historic Oldsmar, for example — have largely ducked housing depreciation. Another bunch have suffered only modest drops. Euclid-St. Paul, northwest of downtown St. Petersburg, shows a 4 percent dip.

"Price declines are haphazard. It depends on how desperately the seller wants to sell," Croushorn said.

A few words of caution: A small sample size can play havoc with median home prices. (The median price means half the homes sold for more and half sold for less.)

A few unexpected million-dollar sales can make it seem as if values have skyrocketed.

A spurt of foreclosures can make it seem that prices have slid off the face of the earth.

Take Snell Isle, one of St. Petersburg's oldest and most exclusive enclaves. At the sales peak in late 2004, 45 homes sold during a six-month period. But in the first half of 2008, only eight homes sold, at least a quarter of them foreclosures. Prices suffered accordingly.

In an area with favorable prices, Indian Rocks Beach, five of 16 sales in the first half of this year were in the million-dollar-plus category. Fewer such homes sold last year, which made this year look better than it was.

Fading of the flippers

Interviews with Realtors, investors and homeowners suggest that the biggest cause of larger-than-normal depreciation was rampant property flipping and mortgage fraud that artificially stoked prices in 2005. When the speculators went away, there was little to break the market's fall.

Many of the worst-hit neighborhoods are in southern St. Petersburg. The low cost of entry — old, small block and wood frame houses could be had for less than $50,000 — brought out the wolves.

"Wherever speculators were in big time, things are worse," said Palm Harbor real estate broker Nikki Ubaldini. "You had shacks that were bought and sold in some of these neighborhoods."

Jerry Sigler has seen the meltdown as a Realtor who specializes in selling foreclosure properties seized by the bank.

One of his latest cases is a 600-square-foot house built in 1925 in southern St. Petersburg's 13th Street Heights. It carries a $110,000 mortgage.

Sigler gave the beat-up house a once-over and broke the bad news to the bank: It's worth $35,000. That's all that the market, absent rampant speculation, can support.

"It looks like fraud. That house wasn't worth $110K to begin with," Sigler said.

The 13th Street Heights neighborhood doesn't make the list of the worst affected, highlighting the pitfalls of statistical analysis. In fact, it's one of the best performing areas for price among the 186 neighborhoods studied by the Times.

A closer look at individual sales clarifies things. Three of the 10 sales in the first six months of 2008 were new houses built by inner-city developer New Millennial Homes. They sold for $115,000 apiece, which acted like an updraft on median prices.

"When you don't have many sales, it's hard to get good data," said Millennial president Michael Shrenk, who admitted that he has had to lower prices across the board during the slump.

Only a 10 percent drop?

For its multiyear look at the housing market, the Times used closed sales recorded by the Pinellas County Property Appraiser's Office.

Pinellas, with its beachfront property and scarcity of new construction, hasn't suffered the price declines of Hillsborough, Pasco and Hernando counties.

Still, real estate experts suggest the pain is worse than the 10 percent declines offered up by the appraiser's office.

Stephen King, an investor who has bought and sold 300 to 400 homes in the past decade, says sales won't pick up without 20 to 30 percent price declines.

"The rise was totally artificial in many of these neighborhoods," King said. "The subsequent crash will be even more painful."