Tampa Bay: Among Areas with Largest Price Decreases

Areas With the Largest Forecasted Price Decreases

For the millions of Americans who became caught up in the crazy "seller's market" of yesteryear, the harsh reality of ARMs and adjustable rates is starting to take its toll. Familiar stories of buyers stretching to purchase a home outside their means, or of investors who can't give away their impulse-buy Gulf-front condo, have created the hottest 'buyers market' in years.

Glass 1/2 Empty: This means I need to reduce my price if I want to get it sold.

Glass 1/2 Full: When I purchase another property, I'm going to get a "STEAL!"

Buyers take note!

Despite the dismal forecasts and negative media hype; no one can really predict real estate's future. The season of out-of-control property values didn't make sense, and this desperate slump only adds to the confusion. Homeowners are left without a security blanket: how can one make reasonable plans for the future without knowing what one of their biggest investment is worth?

Well...

First of all, consulting a Realtor can help you understand what the current market value for your property is - and also what price it would take to get it SOLD. Second, the predictability for the next 5 years is similar to stocks and bonds. Over the long haul housing (like stocks and bonds) follows a natural set of economic fundamentals.

And Third: realize that no matter how low prices may seem at this point, this too soon shall pass. As with any "peak and valley" financial situation - and we're in the middle of a serious 'blue light special' - the fundamentals to a market's ebb and flow will eventually help us see a turnaround.

Buyers take note: the season of "sale" won't last forever!

Sellers: you can start to breath again.

WHY THE DRAMATIC DIP?

Easy money. According to Fortune's Shawn Tully, the 40-year-low interest rates that prevailed from 2003 to 2005 brought a flood of investors into the market. Lax lending standards allowed subprime borrowers, in other words practically anyone who could afford to rent, could afford to buy. Demand increased and prices kept going up.

In 2005 when the Feds started to cool the party off, banks weren't ready to go home. Creative lending continued the crazy mortgage trends like keeping prices low for the first two years -- but only resulted in foreclosure on year 3. Combine the extraordinary foreclosure rate with the sub prime meltdown and the disappearance of the "bargain rates" that started the entire boom - and here we are.

Here's Fortune's forecast for the value of an upscale home (one that sells for double the local median price) in five years. According to Fortune's calculations, prices in most markets will fall by double digits over the next five years.

ORLANDO
June 2007: $522,000
Five-year projection: $343,000
Percent decrease: -34.2%


MIAMI
June 2007: $759,000
Five-year projection: $514,000
Percent decrease: -32.2%

EAST BAY, CA
June 2007: $1,562,000
Five-year projection: $1,078,000
Percent decrease: -31.0%

TAMPA, FL
June 2007: $444,000
Five-year projection: $320,000
Percent decrease: -28.0%

BALTIMORE
June 2007: $565,000
Five-year projection: $408,000
Percent decrease: -27.8%


by Stephanie Stanina