On Sept. 15, 2008, the financial services firm Lehman Brothers collapsed in what is still the biggest bankruptcy filing in U.S. history. Within weeks, Tampa Bay's real estate market had collapsed, too.
Homes that would have sold for an average profit of $31,400 at the start of that year were selling at a $9,300 loss by the time Christmas came around. And the picture would only get worse over the next several years.
The rise and fall and rise of the bay area housing market is dramatically reflected in figures released this month by ATTOM Data Solutions, a California-based firm that tracks sales and prices of more than 155 million U.S. properties. The data show just how frothy Tampa Bay's market was in the mid-2000s, how swiftly it tanked and how long it took to recover from one of the worst housing crashes ever.
In 2005, as the market began to peak, "everybody was an investor, everybody was a Realtor,'' recalled Rachel Sartain, managing broker of two Keller Williams offices in Pinellas County. "Everybody was buying up whatever was available. No hesitation, no worry about the market or recession.''
Thanks to incredibly loose lending standards, even buyers with shaky credit and modest incomes could buy properties with 100 percent financing. Rampant speculation drove up profits on bay area homes from an average of $59,386 at the start of 2005 to $82,368 by the end of that year.
Profits hit their peak in the first quarter of 2006, when sellers averaged $87,000 more than they had paid. The rest of 2006 also saw profits in the $80,000 range although Sartain had detected signs of a cool-down.
"In July of 2006,'' she said, ''you started to see a significant decrease in the absorption rate'' — Realtor-speak for the rate at which houses are selling. "Then in about September or October of 2007, you start seeing the average price start to drop.''
Between the first and last quarters of 2007, average profits dipped from $77,000 to $49,835. By the time Lehman Brothers collapsed the following September, profits had plunged to $12,500
Lehman, one of the nation's oldest and largest investment banks, had become one of the biggest players in the business of subprime loans — those with high interest rates issued to people with poor credit who couldn't qualify for conventional loans. As home prices fell and borrowers began defaulting, Lehman suffered enormous losses that led to the bankruptcy filing and the worst one-day drop in the Dow Jones Industrial Average since the Sept. 11 attacks.
Lehman's failure worsened the 2008 financial crisis and subsequent housing crash in many areas including Tampa Bay. Within six months of the bankruptcy filing, bay area homeowners were selling their houses for an average of $33,000 less than they had paid. The worst period was the first quarter of 2011, when homes sold for $63,000 less than their previous price.
Tampa agent Lance Williams, who traded a career in local TV for real estate in the mid 2000s, contrasts the boom years with the bust.
In 2005, "if a house was on the market more than two weeks, clients started to get worried,'' he said. "After the downturn, the timetable was probably three months to six months. You would have clients saying, 'why isn't it moving?' and you'd just have to tell them the truth — the bottom's fallen out.''
During the slow times, thousands of Realtors left the business. To remain, Saratain says, "you had to become a short-sell expert'' — getting the lender's okay to sell for less than the amount owed.
Tampa Bay homes continued to sell at a loss through the start of 2015. The spring of 2015 marked the first time in six years that sellers again reaped a profit, albeit a modest $4,293. That was also around the time that new foreclosure filings plunged.
By the end of 2016, the recovery was well under way as the average profit rose to $41,000. The peak came in the final quarter of 2017, when sellers made $60,000 more than they had paid.
Since then, profits have dropped to $43,100 in a sign that the market is returning to more normal levels. Lending standards are tighter than they were in the mid 2000s (although they've loosened slightly in the last year or so) and buyers are more particular about price and condition.
"I think the biggest difference between real estate markets then and right now is that you've got very skeptical buyers,'' Sartain said. "The recession was 10 years ago yet it's still a very sensitive subject. Then you have sellers who still want to be able to take advantage of the market. It's like a tug of war.''
ATTOM's figures are for the entire Tampa Bay area, and don't account for what can be substantial variations among counties and communities. Prices and profits generally plunged the most in newer, outlying subdivisions while they held steadier in established neighborhoods like South Tampa and St. Petersburg's Old Northeast.
And people who sold their homes after decades of ownership fared better than those who bought in 2005-06.
"For those poor people who got stuck buying at the height,'' Williams said, "it took them 10 years for the market to recover.''
Contact Susan Taylor Martin at email@example.com or (727) 893-8642. Follow @susanskate.