Feb 6 2008 6:34AM | Permalink | Email this | Comments (1) |
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Charley Hannah, principal of Tampa custom builder Hannah-Bartoletta Homes, says housing recovery began in his market in December, another sign that we may be right about high-end homes leading the way. 

"We can see the market turning," Hannah says, "especially in our price range from $600,000 to $2 million. The trouble is, right now it's more excitement than action. We're in a waiting game with a lot of people who won't go to contract until they see what happens to conforming loan limits in the stimulus package now before Congress. Savvy guys are not going to move now, if waiting gets them another $300,000 on a conforming loan, and the change drops their rate another 100 basis points on that $300,000." Hannah says the big turn in the Tampa market started in December, and gained force in January with Fed moves to lower interest rates. 

"What many people don't understand," says Hannah, "is that there was no real price decline between 2005 and 2007 unless you were a cash buyer, and that's a small part of our market in the Tampa Bay area. We sell mostly to senior business executives and business owners who are still working, not snowbird retirees. If you bought a house in the fall of 2005, with a 4.5 percent mortgage rate on 80 percent of the purchase price, you still paid less to carry that home than if you bought this past fall--at a 20 percent discount in the sticker price--because the interest rate on jumbo loans was up to 7.5 percent." If you do the math, Hannah says, we are only now getting to where the true cost of a home is less than what it was at the peak of the market in 2005. "It's not the price tag that's important," Hannah reasons. "It's what it costs you every month to live there." 

With interest rates coming down, and the prospect of an increase in conforming loan limits, people are back in the market in Tampa. "It wasn't that long ago that we didn't even know if we'd have a selling season this spring," says Hannah. "But it's here. Traffic is way up. We were loaded up, even on Super Bowl Sunday. E-mail responses and electronic searches are up as well. Momentum is building. It's going to be a year of recovery. The Fed moves really helped. Now, we even see consumer finance people on national TV telling people it's time to buy a house. There's a good buzz now, and we'll get more contracts once the conforming loan limit is set. It will be months before it shows up in the government statistics. But stats are history lessons. The recovery is here."