Imagine Florida home prices without anchor of foreclosures

If Floridians want home prices to start rising again, they had better get a grip on foreclosures.

Here's why: Owners of foreclosure homes — and those bracing for foreclosure after missing mortgage payments — constitute close to half of all home sellers in Central Florida.

Distressed properties sell for much less on average than conventionally marketed homes. Bank-owned houses, for example, sell for about two-thirds the price of homes not owned by banks.

Yet even with that hippo hitching a ride on the housing parachute, Tampa Bay home prices have held steady since about February. Can you imagine how prices would behave were the foreclosure load suddenly lightened?

Fortunately, we can. Let's start with today's market, with foreclosure homes making up 50 percent of all sales.

For ease of calculation, let's assume nondistressed homes sell for an average of $100,000. With $100,000 as a starting point, distressed properties would go for an average of about $66,000.

Average those together, and you get a sales price of $83,000.

Now let's assume the market share of foreclosure-threatened homes shrinks to a quarter of all sales. Using those $100,000 and $66,000 figures, you get an average sales price of $91,500. In the blink of an eye, the typical home will have appreciated on paper from $83,000 to $91,500, a healthy 10 percent gain.

Not all counties in the Tampa Bay area would profit equally. Hillsborough County would probably get the biggest jump from a diminution of foreclosures. That's because about 47 percent of sales in October were distressed properties.

Pinellas County had the smallest percentage of distressed property sales in Central Florida: 23 percent. So if foreclosures became a less serious problem, average home prices would rise more modestly.

Pasco County's distressed sales came to about 33 percent of the market. But, unusually for the region, foreclosure and pre-foreclosure homes collect about 90 percent of the price of conventionally sold homes. As in Pinellas, any price bump would be less spectacular.

The biggest question is when foreclosures will cease being the dead weight that has crushed housing values for most of the past three years. Most economists assume they'll continue to flummox the market for at least another year.

But here's to the day when banks cease to be the home sellers of choice. With the foreclosure foot off their necks, it's surprising how high home prices can jump.