Year-in-review columns have been treating 2009 as if it were toxic. Let's take a different approach as we examine the year in Tampa Bay real estate. The housing market forced down some nasty medicine. Is that a bad thing? No, it is not.
Not when you consider that housing boosters in 2008 resembled that plague victim from Monty Python and the Holy Grail. Dumped onto the cadaver cart, he perks up and starts chanting "I feel happy!" The undertaker silences him with a cudgel to the head.
Herewith are the real estate plagues of 2009 and the sometimes tough medicine that will work cures … eventually:
Foreclosure Defaultosis: Unemployment afflicts one of eight working-age residents around Tampa Bay. Housing values have nose-dived 40 percent since 2006. Result? More than 40,000 active foreclosure lawsuits. Fifteen percent of local mortgage borrowers are late on payments. But the system seems to have stumbled onto a cocktail of cures that need time. They include the $8,000 first-time home buyer tax credit, which stimulated home sales in the second half of 2009. The Making Home Affordable program is a government-backed loan modification meant to ensure that homeowners with hardships pay no more than 31 percent of their incomes in mortgage payments. Thousands of Tampa Bay residents have signed up. The year ended with Florida's approval of mandatory mediation for homeowners who want to cut a deal with their banks before they lose their homes.
Builder Bankruptus Nervosa: The year began with Tampa Bay new home sales down by 90 percent from their 2005 peaks. Housing boom mainstays like Transeastern Homes folded up shop. One Florida economist predicted local construction employment, much of it tied to residential building, won't peak again until after 2020. But the housing depression has disciplined the survivors. Builders like Beazer Homes that had stock trading for pennies in 2009 had bulked up finances by year's end. A couple of new builders — Minto Communities and Home Dynamics Corp. — dipped their toes into the Tampa market. Developers of Connerton, the prospective 8,000-home "new town" in Pasco County, defaulted on debts. But Connerton will likely start afresh in 2010 with a lean and mean new owner.
Market Myopia Majoris: After the housing bubble burst in 2006-07, thousands of home sellers seemed content to ride out the stampede. Sure, they would chop $20,000 off the home's list price. But they wouldn't give the shirts off their backs. In 2009, as the downturn entered its third year, attitudes adjusted: Would the buyer like a button down, T or polo? The attitude was reflected in an explosion of short sales — the practice of selling a home for less than the mortgage with the bank's consent. In some months, short sales represented close to a third of transactions across Tampa Bay. Average home prices took their lumps in early 2009. But since the spring, prices have pretty much flattened. Better that prices go flat than go splat. What's even better, as short sales purge the market, supply and demand is slowly grappling for equilibrium.
John Deere Hoof and Mouth Disease: One little-noticed story in 2009 was the decommissioning of thousands of pieces of Florida construction equipment. A large open-air auction house near Orlando dumped tens of millions of dollars worth of bulldozers, pavers, excavators, steamrollers and dump trucks. Most were shipped overseas to Latin America, Europe and Asia. There's nothing so sad as seeing a bright yellow dozer, its tracks muddied from many a happy orange grove uprooting, loaded onto a barge to Shanghai. There's a positive side, however. All that motorized muscle heading to China should generate a steady supply of Chinese drywall for the Florida building industry. On second thought, scrap that idea. That's so 2009.
James Thorner can be reached at firstname.lastname@example.org or (813) 226-3313.