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Wednesday, Dec 17, 2014
Business News

Dropping short sales slow housing sales

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TAMPA — A big drop in short sales appears partly to blame for the slowdown in housing sales in the Tampa Bay area and Florida, new numbers from the Florida Realtors trade group show.

Some of that could be positive news. Housing prices have risen in the past year, so fewer homes are underwater and eligible for short sales, Florida Realtors economist John Tuccillo said. But worry over whopping tax bills that could come with a short sale could also be responsible, said Tampa-area Realtor Brad Monroe.

Last month, Realtors sold 2,498 existing single-family homes in the Tampa-St. Petersburg-Clearwater metro area at a median sale price of $147,500. Prices seem to be still on the upswing, because the median price a year ago was $135,000.

However, a decline in the number of homes changing hands is becoming a trend. Last month, the number of closed sales was down 3.1 percent when compared with February 2013, and sales have fallen year-over-year in three of the past five months, Florida Realtors figures show.

Statewide, Realtors are still selling slightly more homes than they were a year ago. Realtors sold 15,826 homes across Florida in February, which was up 1.5 percent over last year, at a median price of $165,000.

Monroe, a local Realtor with Pangea Realty Group, chalked up some of the Bay area’s slowness to difficulty getting loans. For example, a wealthy client of his is going through a marital separation and was in the market for a new home. A lender turned down his client’s mortgage application because the lender demanded a letter from his wife, saying he didn’t owe her money. Getting that letter has been tying things up.

Years ago, the lender may not have required it, Monroe said.

“This bank should have been tripping over themselves trying to get this guy into their high-end wealth management group,” Monroe said.

A second problem lately has been anxiety over what Congress will do with mortgage debt forgiveness. Until this year, people who sold their homes through a short sale — the sale of a home for less than what’s owed on the mortgage — didn’t have to pay taxes on the debt that banks forgave. That lenient policy expired in December, and Congress hasn’t yet reenacted it.

For now, many people are afraid to conduct short sales because they could get hit with a huge IRS tax bill on the amount of forgiven debt, Monroe said.

In fact, the number of short sales conducted last month statewide fell by more than half, Florida Realtors figures show. The Realtors group had no data on short sales for the Tampa Bay area alone.

Florida Realtors still put a positive spin on February’s housing figures, even if things have slowed from last year.

“The majority of results for the residential market paint a picture of a normal growing market,” Tuccillo said in a prepared statement. “The weaker results in sales for both single-family homes and townhouses and condos are solely the result of plummeting short sales.”

msasso@tampatrib.com

(813) 259-7865

Twitter: @msasso

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