“Most of 2006 will be a period of downward price adjustments and inventory liquidation. In most submarkets the finished home inventory is under a 6 +/- month supply and the vacant developed lot inventory is less than 12 +/- month supply.”

Eventually, inventory homes will be gone. Once move-in-ready homes have depleted, the incentives and money-off deals will subside. Increasing construction costs will make new construction homes more expensive in the future.

“The magnitude of home and lot price reductions that are necessary to stimulate sales will vary by submarket and community, but is probably at least 15 percent lower than late 2004 and early 2005 prices in most cases. Inventory price reductions of this magnitude are already common.”

People are getting a better deal on land in 2006 than they were in 2004 and early 2005. The reduction in lot price ultimately decreases the home price.

“The local media is not helping by emphasizing the 2006 versus 2005 declines in sales and widely advertised home price reductions (mostly on inventory). One of the reasons that we believe the market will improve in late 2007 or 2008 is that the year to year comparisons in sales will probably start to turn favorable. Hopefully, this will be reported by the press with the same enthusiasm as the decline.”

The media can sometimes depict situations as being more bleak or negative than they really are in order to sensationalize the story, making it more “newsworthy,” but less straightforward. The truth is, more and more people will start purchasing homes, restoring the balance between buyer and seller. The buyer’s market will eventually dissipate.

“. . . the long-term fundamentals of the Tampa Bay Market remain very strong. The Tampa Bay area is a full service major metropolitan area that consistently generates some of the highest employment growth in the nation . . . even with the recent ramp up in prices, Tampa remains affordable when compared to most major metropolitan areas, in and outside Florida.”

Tampa Bay is a thriving urban market. For those who want to call Florida their home, this area is still a great place to buy.