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Housing starts hit record low

Higher unemployment, tight-fisted lending and sagging consumer confidence drove the new-home market to record lows in 2008.

Tampa Bay area builders started construction on 932 homes in the last quarter of 2008, crowning a crummy year in which only 4,730 homes broke ground.

The previous low for annual housing starts was 4,798 in 1991, another recession year that messed up the housing market.

"The fourth-quarter number was the lowest in the 23 years that we've been keeping records," said Tony Polito, a housing consultant in the Tampa office of Metrostudy.

Our region's not alone. Builders broke ground on 904,000 homes nationally in 2008, the Commerce Department reported Thursday. It was the worst year for the industry since they started keeping records in 1959.

The crash of the once-soaring housing market has sickened the nation's economy. Its fallout has contributed to big pullbacks by consumers and businesses, plunging the economy into a recession now in its second year.

But few parts of the country are as dependent upon housing as Florida. Tampa Bay builders finished 2006 with 17,683 housing starts and have watched construction shrivel by nearly 75 percent since then.

The impact has been ugly: The region has shed thousands of jobs in construction, mortgage lending and real estate sales. Several builders have gone out of business or declared bankruptcy. They include Smith Family Homes, Tripp Trademark Homes, WCI Communities and Nohl Crest Homes.

Three other home builders active in Tampa, K Hovnanian, Beazer and Standard-Pacific, trade on the stock market for relative pennies.

The Federal Reserve has taken extraordinary steps to provide relief. It is buying certain types of mortgages and has slashed a key interest rate to a record low of between zero and 0.25 percent. Mortgage rates have dropped to their lowest levels in decades.

But builders have to wrestle with Florida unemployment that has reached a 16-year high of 7.3 percent and is expected to continue rising. That stresses existing home owners and crimps housing demand.

Another sore spot has been the glut of resale homes, including foreclosures properties, said George Schulmeyer, Tampa division president for K Hovnanian. Many distressed properties have never been lived in and compete directly with the new homes that Hovnanian offers in central Pasco and southern Hillsborough counties.

Hovnanian was hit hard in August, September and October, but December and January were much improved, Schulmeyer said.

Polito, previously fairly upbeat about the housing industry's recovery chances, predicted 2009 would be subpar for builders.

One hopeful sign: Tampa builders have thinned their inventory of unoccupied homes to 2,617 from 4,679. On the other hand, the region had 30,640 developed vacant home sites at the end of 2008. Based on 2008's housing starts, that's enough to last more than six years.

"It's going to take a while for the credit freeze to thaw out," Polito said.

Information from Times wires was used in this report.

Headed south

Tampa Bay area housing starts have plummeted 73 percent since the 2006 boom year. Here's a recent yearly breakdown:

2008: 4,730

2007: 7,244

2006: 17,683

Source: Metrostudy

Housing starts hit record low 01/22/09 [Last modified: Friday, January 23, 2009 8:43am]
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