Housing Market Cooldown Less Noticeable In Pasco County, Fla., Buyers’ Market Prevails

While a drop in new building permits indicates a slowing Florida real estate market, the situation is better in Pasco County (map) than in other nearby counties, according to today’s St. Petersburg Times.

A chill in May’s housing market sent Pasco’s year-to-date building permit growth into retreat for the first time this year (compared with this point a year ago). As demand cools and speculative investors back away, area inventories are ballooning. In west Pasco, they’ve increased sixfold from this time in 2005. In east and central Pasco, inventories have doubled.

In what may be the tail end of the stare-down between sellers and buyers, a buyers’ market may be ready to bloom.

Despite a statewide slowdown in home construction, Pasco County issued 3,106 single-family home permits through June of this year, according to the U.S. Census and county figures. This time in ‘05, 3,138 permits were issued. As of April, Pasco’s bellwether indicator was still defying nationwide and state trends, standing at 613 permits in April, leading last year’s figure by 162 permits.

In May, however, just 505 permits were issued, a drop from 700 a year ago. That’s still a small dip compared with deeper drops in the Tampa housing market, but the chill confirms fears of a spillover from a national cool-down. And it’s showing signs of creeping north.

• In Pinellas County, year-to-date figures through May 2006 are lagging by 144 permits.
• In Hillsborough County, 824 fewer permits were issued this year, comparing to the same time periods.
• Hernando County gained of 188 permits through May 2006, from the same period last year, but April brought a slight slowdown, with 38 fewer than the same time last year.

The slowdown follows a trend of bulging housing inventory that began last fall across the state. In Pasco, inventory ballooned from 800 resale homes and condos this time last year to 4,900 currently, said Jennifer France, a past president of the West Pasco Board of Realtors.

She blamed higher Florida home loan rates, as well as insurance premiums that have reached $2,300 for a modest $100,000 home — high enough to prevent first-time buyers from qualifying under lenders’ standard mortgage ratios. In parts of Pasco, there are just a handful of buyers a month, and six months’ worth of inventory to boot.

The trend may take its toll not just among real estate investors, but also in an industry that’s been key to the county’s economy.

“All those who got into real estate because of the easy money, you’re going to see a lot of Realtors leaving the market,” said Gregory DeLaRue, of Keller Williams Realty and president-elect of the East Pasco Association of Realtors.

The chill in the sector has crept across the state, having been noticeable in Orlando and the South Florida housing market for some time.

“It shows the changing marketplace,” said Jack McCabe of McCabe Research Co. “Every market has seen a drop in sales and an increase in inventory. Pasco is one of those.”

In the Tampa-St. Petersburg-Clearwater area, the first quarter saw a 23 percent drop from 11,740 sales of existing homes in the same period last year to 9,087, according to Florida Association of Realtors numbers. Pasco is not as severe, although this may be just preliminary.

“Their time is coming just a few months down the line,” McCabe said.

Pasco sellers are throwing out concessions to lure buyers that range from $2,500 to $10,000 in value, though agents are advising sellers to pay buyers’ closing costs rather than underprice homes. In parts of South Florida, incentives already range from $10,000 to almost $30,000, with broker commissions between 5-7 percent to help sway buyers.

First-quarter new-home prices pushed upward to $313,000 from $300,000 at the end of last year. That’s a slower rate of growth than we’ve seen in the past few years, and prices may level off or slip yet.

“It’s always several months later that they go down,” McCabe said. “The sellers and buyers are in a stare-down process. Once we get the inventory absorbed, we’ll see appreciation again. It will be real value, not the kind of speculator value we’ve seen in the last five years.”

For now, a buyer’s market beckons. Get out there and find the right Florida mortgage loan financing and make it happen.