A real glut, a rut, but then what?
CHUIN-WEI YAP - St. Petersburg Times
Feb 18, 2007
ST. PETERSBURG, FL. - It hasn't been the best of times for sellers or builders, of course. Insiders predict a soft market through 2007, but then a rebound.
Tom Stephan, an agent with Realty Options, noticed a change in December, and it wasn't the weather. Checking out properties in subdivisions like Water's Edge on Moon Lake Road and Longleaf on Starkey Boulevard, he saw something that he had not experienced for a while: people browsing for homes.
"Most weren't there to buy, but it was a contrast to months of quiet model sales centers," he said.
"It was like a revolving door," he said. "People are still looking. They are pickier now, and they have a lot more to choose from. But I'm optimistic now."
Still, the numbers are not on Stephan's side for now.
In Pasco, September and October brought a fleeting dip in inventory, according to the real estate agency Home Discovery. But numbers went back up in November as investors dumped speculative properties. Between September and November, there were 25,379 homes for sale in Pasco, compared with just 9,088 in the same period last year.
The county issued 4,723 single-family home permits in 2006, compared with 7,252 the previous year, according to Pasco's central permitting division. This is the worst performance of a benchmark indicator of the county's economic health since 2002.
Optimism for 2008
Builders, real estate agents and industry regulators are now saying it will be 2008 at least before the market recovers from last year's oversupply. Sky-high insurance rates and developers' fears of rising road impact fees remain a drag on the economy.
"I think it'll still be soft for 2007," said County Commissioner Ted Schrader, also a prominent landowner in east Pasco. "Inventory is still strong and there are a lot of available lots. I don't really see an uptick until next year."
Giant projects like the 2,000-acre Bella Verde (the former Cannon Ranch on State Road 52 and Interstate 75) are still struggling to find their feet. Lennar Corp. has taken the 1,800-acre Epperson Ranch back to the drawing board. Prospects for sealing a development contract for the 1,700-acre Kirkland Ranch in Wesley
Chapel reportedly fell apart last summer.
But developers are already positioning themselves for the recovery.
Orlando economist Hank Fishkind, who consults for some major projects in Pasco like Dr. Doug Weiland's proposed office megadevelopment, Ashley Glen, argues that the Suncoast Parkway and Pinellas County's heavy saturation of development will make Pasco and Hernando attractive development destinations for years to come.
Pasco is "moderately overbuilt" with single-family homes, Fishkind opined in a January presentation to the county's impact fee committee. But the market should be stabilizing, he said.
In August, Estelle Scalice was shopping for a home with her daughter, Deborah Gonzalez, at Tierra Del Sol on U.S. 41. By the end of the year, they had bought a home there, Scalice said.
In December, Pulte Homes broke ground on the residential component of the 5,100-acre Wiregrass development in Wesley Chapel. This month, JES Properties broke ground on Riverwood, a 640-acre community south of Zephyrhills, near the Hillsborough-Pasco county line. Builders like Standard Pacific and Beazer Homes reported strong years locally.
"In late 2007, early 2008, the market in Tampa and between Tampa and Orlando will begin to pick back up," said F. Carl Streck, a principal in Priority Developers, which has positioned major projects in Land O'Lakes and the Zephyrhills area to start selling early next year.
A resilient economy
The fear that Pasco's economy would take a hit because of the residential market slowdown hasn't panned out. Job numbers remain strong. State figures show the county is still adding to its employment ranks, now at 184,718, up from 179,408 at the same time the previous year.
The big question is whether 2007 will see the broader market in Pasco take a spillover hit from the slumping home building industry - a key sector often said to be the county's biggest economy.
But figures from the U.S. Bureau of Labor Statistics suggest that the construction industry may not be Pasco's biggest. About a fifth of Pasco's workforce could be attributed to the construction industry, but the bulk of Pasco jobs actually belong to that amorphous lump called "service providing."
The bureau's numbers lag behind real time by at least two quarters, and they have some discrepancies because of the way the data is reported for different job sectors. Nevertheless, they shed light on why the home building slowdown hasn't yet spilled over into the broader economy. Pasco is still in the top 10 fastest-growing counties nationwide. Pasco ranked ninth, with 88,650 net new residents from 2000 to 2005, according to a U.S. News & World Report analysis using census data.
These trends point to an increasing diversity and resilience in Pasco's economy that allow it to weather jolts to its key industry, as longtime real estate agent Dewey Mitchell points out.
Case in point: In contrast to residential construction, commercial construction surged in Pasco last year, adding 11 times more value than it did in 2005.
Builders collectively put nearly $78-million worth of commercial construction in progress in 2006. They said much of the leap was a matter of commercial building catching up to burgeoning rooftops, which redirected resources that were otherwise heavily focused on the residential market.
"The circumstances are a lot different today," Mitchell said. "The silver lining to it all is that the Tampa Bay area is a strong growth area. We still have positive employment growth."
Chuin-Wei Yap covers growth and development. He can be reached at (813) 909-4613 or cyap@sptimes.com.
[Illustration] Caption: PHOTO, M.N. GOLDEN - Times: Estelle Scalice looks at a model home in the Tierra del Sol subdivision with her daughter Deborah Gonzalez in August. By the end of the year, they had purchased a home there. PHOTO, JANEL SCHROEDER-NORTON - Times: As house sales slow, price reduced signs are appearing more on homes for sale such as this one in Port Richey. PHOTO, M.N. GOLDEN - Times: A sign sits in front of homes built in the Tierra del Sol subdivision in Land O' Lakes last year. As 2006 ended, sellers reported more people looking at homes , but not more people buying. They're hopeful, however, that by 2008 things will be better. (Ran Page 1K, Pasco Business)
Credit: Times Staff Writer