TAMPA, Fla. – May 8, 2008 – A top real estate economist offered
shell-shocked Tampa Realtors a hint of optimism Wednesday, saying
the Bay area housing market should begin to improve in the second
half of the year. Home sales and prices, which have been
battered in recent months, should stabilize and then begin to raise
in 2009, predicted Lawrence Yun, chief economist at the National
Association of Realtors.
In an hour-long speech before 100 members
of the Greater Tampa Association of Realtors, Yun acknowledged that
his observations and forecasts are often optimistic. But Yun said
there are several economic indicators that point to a
recovery for the national and Tampa Bay area housing markets.
“The worst conditions in the Tampa market may have already
passed,” Yun said. “How strong will the recovery be? I
cannot really say. I think the second half of 2008 will be better.
But if I look at the long-term perspective, five years from
now, comfortably, one can say home prices in this
region will be 20 to 30 percent higher.”
The key to the turnaround will be to get the “fence sitters” into
the housing market. Those people, who have the financial means to
buy a house, perpetuate the slump “not because of the fundamentals,
but because of the psychology,” he said.
In his speech, Yun cited the August 2007 collapse of the subprime
mortgage industry as a positive sign. While making up just 9 percent
of mortgages in the United States, subprime vehicles have been
involved in 53 percent of U.S. housing foreclosures, which dragged
down the housing market.
Those loan products will steadily be replaced by safer Federal
Housing Administration-backed loans, Yun said.
Another seemingly daunting sign – a significant decrease in new
housing starts in the Tampa Bay region – is also a good sign,
reducing the glut of available homes that has held down prices.
Mortgage rates are at near historic lows, business
spending is strong, and corporate profits are up, all good economic
signs, he said.
“There’s a change in the mood over the last couple of weeks,” Yun
said. “The first three months of the year, everyone was talking
about how deep the recession would be.”
Talk of a recession is linked by many consumers with the prospect
of job loss, and those consumers become hesitant to make major
purchases such as a home, Yun said.
“Fortunately, we’re not in a recession, or at least not
yet,” he said. “I don’t think we will go into a recession.”
Gross domestic product for the first quarter of 2008, a key
measure of economic performance, was “very soft, but nonetheless
positive,” Yun said. He forecasts the second quarter to be “equally
soft, but not negative,” with things picking up in the third and
fourth quarters.
Yun’s speech was a breath of fresh air for an industry that has
been particularly hard-hit in the Tampa Bay area. Local home sales
have slid from 2,810 in the first three months of 2007 to 2,079 for
the same period this year, according to the local Realtors’ group.
Average residential prices have slipped from $280,339 to
$255,485 in the same period.
source:
