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Tampa Bay area housing starts plunge 90 percent from peak

Bay area builders poured foundations for just 697 homes from January to March — a 90 percent plunge from the peak three years ago.

Stingy mortgage lending and competition from foreclosure homes drove new home starts in the Tampa Bay area in first three months of 2009 to their lowest level ever recorded. Builders and construction jobs tumbled as housing starts for Pinellas, Hillsborough, Pasco and Hernando counties continued their fall from 6,043 in the same quarter of 2006.

Even measured against starts in the first three months of 2008, the new numbers are dismal. Builders started 1,239 homes from Jan. 1 to March 31 a year ago. This year's tally was 44 percent below that.

The credit crunch in October, bought on by recklessly exuberant lending during the housing boom, deprived not only home buyers but home builders of crucial loans as 2009 began.

"This is the direct result of the credit markets freezing up in October. People who would have signed up for new homes in November and December couldn't do so," said Tony Polito, Tampa-based housing analyst for the firm Metrostudy, which supplied the statistics.

Most local builders have bled money as they compete on price with thousands of foreclosure homes dumped by the banks. It's not uncommon to see barely-lived-in houses abandoned by speculators sharing streets with new home sites.

Engle Homes, called Trans­eastern Homes when it built some of the bay area's bestselling neighborhoods, announced its dissolution earlier this month. It joined already-defunct builders Smith Family Homes, Tripp Trademark Homes, Windjammer Home Builders and Nohl Crest Homes.

Prominent Florida builders Mercedes Homes and WCI plan to stay in business under cover of Chapter 11 bankruptcy. On the theory that size equals strength, big-time builders Centex and Pulte announced a merger in early April.

"January was absolutely terrible. It was one of the worst months I've seen in business," said Jim Deitch, chief operating officer of Southern Crafted Homes in Land O'Lakes. "We thought after the election things would bust loose. But they didn't."

Brad Hunter, Metrostudy's chief economist, said the downturn was expected. Not only are builders struggling to sell at a profit, but consumers are still standoffish.

"There are 'four Fs' of pent-up housing demand: fear, financing, falling home prices and failure to sell an existing home," Hunter said. "People who have a legitimate need for a new home are holding back."

Polito suggested another barrier to entry for Tampa Bay area residents: an unemployment rate that has topped 10 percent. Few of the jobless are in the mood for raising a roof. And the cycle feeds itself: Construction accounted for 40 percent of the nearly 50,000 jobs lost statewide from January to February.

In a slightly encouraging sign, home builders are whittling away at unsold inventory, but the number remains too high, Polito said. He counted 2,430 completed but vacant new homes in the first part of 2009, down from 3,351 a year ago.

Builders suggested business may improve as the year progresses. Deitch reported 100 more visitors to his model homes in March than in January.

Charley Hannah hopes Deitch is right. Owner of luxury builder Hannah-Bartoletta Homes, Hannah relies on a brisk market for less expensive homes to supply customers for his $700,000 to $1.3 million offerings.

"Part of my problem is that people who can afford to move up can't sell their home,'' Hannah said. "Once those cheaper homes sell, it will unleash my customer base.''

Hannah, whose own sales have collapsed about 90 percent, looks forward to a stable market without the screeching heights and death-defying depressions of the last five years.

''I don't want to go through this again in three, four or five years," he said. "Once in a lifetime is enough.''

By the numbers

First quarter housing starts in the Tampa Bay area:

2006: 6,043

2007: 2,240

2008: 1,239

2009: 697

Source: Metrostudy

Tampa Bay area housing starts plunge 90 percent from peak 04/16/09 [Last modified: Thursday, April 16, 2009 11:11pm]

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