Tampa area Housing Inventories reach 42 years!

Hello All!

Just a quick note here before I post. I am on vacation starting tomorrow for a week. If I can hop on at some point and throw up a post I will. No promises though. Its time for some relaxation!

I want to thank everyone who continues to stop by and read the blog. The Housing Time Bomb is closing in on 20,000 visitors since its inception in February. I have learned a lot from all of your feedback and ideas, and I hope we can continue to steer our way through this difficult market.

I think we have done pretty well so far!

Back the the blog!

I thought I would throw up this article today. After reading this, I am glad I don't own a house in Tampa!

As you can see below, some areas of Tampa now have 42 year invetories based on current sales. Here is the link to the article . I will post the full article below:

"In its quest for financial health, the Tampa Bay area home building industry is grappling with a giant scab on the landscape: 31,900 vacant home sites waiting for buyers.
New-home closings in the region fell 42.6 percent this spring vs. the same time last year. But that's nothing compared to the glut of vacant lots, enough home sites to last builders 51/2 years at current sales rates.

Hillsborough County's supply is 49.6 months, or more than four years. Pasco and Pinellas counties have nearly five-year supplies. And Hernando County's lot supply is 136 months, or 11 years.

It gets worse: Citrus County has a 508-month supply. At current sales, it would take 42 years to burn off all its finished home sites.

Citrus' new-home market has fallen off a cliff, with only 95 homes starts in the past year amid a surplus of 4,018 developed home sites.
"It's too far a commute and the retirees are more nervous as a group, so they're not coming to buy in Citrus," said Tony Polito, who compiled the new-home report for housing consultant Metrostudy.

In a glimmer of good news on the lot front, developers have largely ceased paving former cow pastures, orange groves and forests. The industry delivered 915 lots in the second quarter of this year that ended June 30, far below the 3,813 lots delivered in the same period a year earlier.
"Hillsborough finally stopped adding lots this quarter," said Polito, who explained that a balanced market has an 18- to 24-month supply. "The other counties stopped adding lots months before that."
Builders also continue to suffer from declining year-over-year sales. New-home closings nosedived 42.6 percent, from 3,085 in the second quarter of 2007 to 1,772 in the second quarter of this year.
Local builders began construction on 1,401 houses in the quarter ending June 30. That's 28.7 percent below last year's pace of 1,965 housing starts. In many neighborhoods builders compete for sales against investors desperate to unload hardly lived-in homes bought during the boom.
Typical is Meadow Pointe in Pasco. Two years ago builders closed on 596 homes. Last year closings slumped to 349 and settled at 190 this year."

Final Take:

Notice that the builders have almost completely stopped building. Its about time! You would think that they would have stopped when inventories reached 30 year levels!

Its going to take decades for Tampa to recover from this. I guarantee you some of these developments will sell for .10 on the dollar at some point.

Keep in mind the housing bubble theories in 2006/07 were based on bad lending, ridiculously high housing prices, and rising inventories.

I originally thought at the worst we would see 20-50% drops in housing prices depending on the area. However, the declining economy, the disasterous response by the Fed, and the carnage in the banking system simply must to be added to the equation when trying to estimate how bad its going to get in areas like Tampa.

I am beginning to think that distressed asset sales may be the only way to dump this inventory in areas like the inland empire in Cali or parts of Florida.. This means some of these properties will sell for pennies on the dollar. I say this because I simply can't see anyone ever having the courage to buy homes in an area where everything is vacant.

Bottom Line

I have heard from a couple realtors that traffic has come to a complete stop in certian bubble areas that were hit hardest by the housing bubble.

Reality will soon set in on the sellers in these markets. Builders are going to start dumping these projects as the banks start pressuring them for payment. As a result, I predict you will start seeing distressed asset sales in certian areas within the next year.

This will be the time to start seriously looking. The foreclosure buying suckers are about done chasing the "deals of the century"(yeah right). If you live in an area like Stockton or Tampa get your checkbook ready. The carnage is taking its toll and desperation is about to set in.

Its already started with CDO's after Merrill's sale at .06 on the dollar to a firm in Texas.

Let the carnage begin!

I hope everyone has a great week with their investments.