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Investor-driven local housing rebound worries some experts


Published:   |   Updated: June 21, 2013 at 06:09 AM

TAMPA - An investor buying spree has the Tampa Bay area's home prices soaring, the latest housing figures show, leaving some to wonder how much longer it will continue before the investors back down.

The median sale price of a single-family home in the Bay area rose to $158,000 in May, up 23.2 percent from a year ago. Meantime, the number of closed sales here hit 3,631, up a strong 19.8 percent from the same time last year, Florida Realtors data released Thursday show.

Those growth rates surpassed the state's housing figures. Statewide, the median sale price rose 15.9 percent to $171,000, while the number of closed sales rose by 18.7 percent.

Aggressive investors are a big reason prices are rising so much. Cash buyers snapped up 46 percent of single-family homes sold around Florida last month, Florida Realtors data show. Some cash buyers undoubtedly will live in the homes, but it's presumed many of them are investors, because they are most likely to buy with cash.

Realtors have a love/hate relationship with them. Investors have helped to prop up the formerly decimated real estate market, but they've also shut out of the market some would-be homebuyers, who can't match the prices they can pay.

A fan of investors' emergence in the market is Martha Bingham. She was looking to sell off her north Valrico home and move into an independent living facility several months ago. So, she listed her home for sale with a local Realtor and quickly got interest from seven potential buyers, so many, in fact, that it didn't allow her time to pack up her home, said Bingham, 72.

"I figured I'll never get moved at this rate," she said.

She eventually sold to a giant investor called the Blackstone Group, a New York investment firm that has purchased more than 1,000 homes in Hillsborough County alone. The Blackstone Group paid nearly the full list price of the home.

"They offered me everything I was asking, other than $500," Bingham said.

In fact, sellers statewide are getting more of their original asking price. In May, sellers got nearly 94 percent of their original list price, up from about 91 percent a year ago, Florida Realtors figures show. Bidding wars for some homes are causing prices to actually exceed the list price, Tampa real estate agent Rae Catanese said.

Around Florida, some Realtors are whispering about a bubble in the housing market.

John Tuccillo, chief economist for Florida Realtors, however, challenged that assumption. Investors today have sophisticated financial models that tell them how much they can pay for a house and still get a decent return from renting it out. Once prices rise too high, they'll stop buying. That should keep investor buying from getting out of control, he said.

Already, a shortage of inexpensive houses is forcing investors to move upscale and buy pricier homes, he said.

"There aren't as many unsophisticated investors out there as there was back in 2004 and 2005," Tuccillo said.

One positive emerging from the rising housing prices is that homeowners are slowly regaining equity in their homes. That should be good for the state and local economy.

Economics firm Moody's Analytics studies how much people tap into their home equity for cash, by refinancing their homes. In early 2007, for example, people in Tampa were drawing so much cash from their home equity that it accounted for 18 percent of their income, Moody's economist Chris Lafakis said. Americans overall only got 10 percent of their income from their home equity.

That fell hard, of course, when the housing market imploded, and by 2010 people's homes had become a serious drag on their incomes. People no longer could draw money from their home equity, and they were so busy paying down their mortgages that their homes subtracted 5 percent from their incomes. A second reason homes became a drag was that people began putting more money into their homes when they refinanced, instead of taking money out, Lafakis said.

Today. that's beginning to change. Homes are still a 2-percent drag on Tampa residents' incomes, but people may soon be able to take money out again, he said.

msasso@tampatrib.com

(813) 259-7865

Twitter: @msasso

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