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Home building continues to be sluggish in Tampa Bay area

Tampa Bay home builders have hammered fewer nails so far this year amid a sluggish economy and a weak housing market.

Local builders started 1,038 homes in the second quarter, and a total of 1,871 in the first six months, an 11 percent drop from the first half of 2010, according to Tampa's Metrostudy, a national company that tracks the construction industry.

Tony Polito, a housing consultant with Metrostudy, cautioned that the 2010 figures were inflated by buyers lured by the $8,000 federal tax credit.

The silver lining could be that second-quarter starts topped those of the prior two quarters, he added. The bay area's low for housing starts — 727 starts — occurred in the first quarter of 2009.

"Compared to the low point, we're up," Polito said. "We're still riding along the bottom."

In order to survive the Great Recession, many builders designed smaller, lower-priced houses to attract a bigger pool of buyers. In the past 12 months in the bay area, builders started 2,141 new homes that were priced under $200,000, a 9.8 percent drop from 2010. Starts priced above $200,000 were up 8.5 percent.

Taylor Morrison Homes builds homes from Tampa to Naples priced from $85,000 to $700,000. The company's 240 starts this year are nearly double its starts in the second half of 2010.

Construction has been triggered by decreasing foreclosures and by having fewer existing homes on the market, said Steve Kempton, the company's west Florida president.

The company is seeing more customers who have sat with cash on the sidelines to wait for the economy to improve. He cautioned that builders still have a bumpy ride ahead.

"Were excited about the market," he said. "It's trending in the right way. Customers still want a quality product."

Paul Thompson, head of the Florida Home Builders Association, said builders across the Sunshine State are selling more homes and should top last year's starts of 31,600 by about 15 percent. The association lost half — about 2,500 — of its builder members in the past three years.

He sees a silver lining in the glut of foreclosed homes on the market. The older, bank-owned houses, he said, cannot compete with the new-market sector.

"Things are improving but slowly," Thompson said. "It's still a tough market."

Financing remains a problem. Many buyers don't qualify for the record low interest rates.

In the wake of the housing bust, lenders tightened standards, and most now require a 20 percent down payment for conventional loans. The alternatives are government-backed loans that require only a 3.5 percent down payment and a credit score of about 620 or better.

Jeff Thorson, Tampa division president for William Ryan Homes, said high unemployment and low consumer confidence are still weighing on the construction industry. The company's starts were about 50 percent lower than projected for the first half.

More people prefer to rent homes and apartments, although interest rates and home prices have fallen, he added.

"Our industry always rebounded on job growth," he said. "The first six months did not meet our expectations."

Mark Puente can be reached at [email protected] or (727) 893-8459. Follow him at Twitter at twitter.com/markapuente.

Home building continues to be sluggish in Tampa Bay area 07/18/11 [Last modified: Monday, July 18, 2011 11:21pm]
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