TAMPA — While the rest of the Tampa Bay area slowly recovers from the housing crash, South Tampa is undergoing one of its biggest land grabs in years.
Speculative real estate deals that disappeared during the crash are back in force in South Tampa. Realtors are cold-calling scores of people who live south of Kennedy Boulevard hoping to entice them to sell their 1940s- or 1950s-era homes to builders, who tear them down and build new four-bedroom luxury homes starting at a half-million bucks.
Meantime, homebuilders with no history of building in South Tampa are flooding into the market and bidding up prices for spec home lots. Builders and Realtors insist families are the end users of all these homes, and we’re not seeing a repeat of the mid-2000s investor frenzy. However, the pace with which builders are tearing down and rebuilding is unsustainable, some South Tampa real estate professionals say.
“From my perspective, it’s reaching sort of an alarming pace to me,” said Sharon McSwain of Domain Homes, who’s seen her cost of lots spike from about $57,000 to $88,000 in a year’s time. “I’m not as aggressive today as I was six months ago or 12 months ago.”
Realtors describe South Tampa, usually defined as south of Kennedy Boulevard but north of Gandy Boulevard, as an island that held its value better than most in the crash. They speak reverentially about South Tampa’s access to the prestigious Plant High School district, which along with the area’s convenience may be its biggest draw.
However, the surge in land prices here has taken some real estate veterans aback. John Lum, a longtime South Tampa developer and Realtor, estimates that home and lot prices here have risen as much as 30 percent in the past couple years.
Homeowners who might have expected $200,000 for their homes and lots just a couple years ago may want as much as $300,000, which is forcing builders to move away from $500,000 and $600,000 new homes and into $800,000 ones, Lum said.
For now, they’re finding homebuyers for nearly everything builders turn out.
Along Interbay Boulevard, McSwain picked up a large lot with a modest two-bedroom home built in 1926 for $140,000 in February. She split the single parcel of land into two lots and is building a $300,000 spec home on each. She has buyers forboth, she said.
McSwain is one of the many new homebuiliders targeting South Tampa because of the fatter profit margins — often 10 percent, Lum estimated — and scarcity of land, which is driving up prices. She relocated from Atlanta in 2010 and targeted the less-prestigious areas that are south of Gandy Boulevard.
Builders are starting to target the same south-of-Gandy strategy, though, and just in the past three years the prices of her finished homes have risen from about $242,000 to well over $300,000.
She worries that prices once again are outpacing people’s incomes. Already, interest rates have risen a full percentage point in recent months. Another 1 percentage point increase could be “lethal,” she said.
“I don’t think their (families’) personal financial capacity is going up that much,” McSwain said.
Last week, Emerald Homes, a luxury homebuilding arm of the powerhouse builder D.R. Horton, announced it will start building in South Tampa and has bought up more than 10 lots there. Prices should start at $300,000 and run to about $1 million.
And Cardel Homes, which mostly has been building in Apollo Beach and the Riverview area according to land records, has been buying up South Tampa lots.
Michael Morris, president of Bayfair Properties, which has built in South Tampa for years, thinks a lack of bank financing is driving many homebuilders to target South Tampa. During the housing boom, builders that wanted to build in master-planned communties such as FishHawk Ranch had to commit to buying several lots from the developer up-front. Then, they had to buy so many lots every quarter, Morris said.
Nowadays, no one has enough credit to buy lots every quarter, so instead they’re buying up individual lots around South Tampa, Morris said.
“It’s easy to come in and take down a single lot and suddenly you’re in business,” he said.
According to figures from the Multiple Listing Service, where Realtors list property for sale, at least 175 properties in South Tampa that are marketed as new construction opportunities changed hands between August 13, 2012, and August 13, 2013. That’s up from 145 properties a year ago and up from 109 properties two years ago, Prudential Tropical Realtor Brad Monroe said.
Another 130 properties marketed for new construction are listed for sale on the MLS or are under contract, Monroe said.
There’s such competition to find and buy lots that one of Monroe’s colleagues at Prudential Tropical spends hours cold-calling homeowners using a set script. Lum, a partner in the firm Century 21 LIST with Beggins, said agents are knocking on doors, cold-calling and distributing fliers in the hope of convincing someone to sell their home and let a builder tear it down and rebuild.
They’re going after the three Ds that might convince someone to sell, Lum said — death, divorce and debt.
“Everyone’s trying to find when that next lot’s going to come up,” he said.