In June 2007 a Forbes article appeared which stated that the housing price slump was largely over and identified Tampa, FL as the perfect candidate for a rapid housing recovery.

I was living in Tampa at the time and predicting catastrophe.  To this day I remain in awe at the lack of economic understanding demonstrated by Forbes and Moody’s Economy.com.  The latest available data indicates that during January 2010 Tampa’s housing price index set a new low down 37.7% since May 2007.

The following includes a link to the original article, relevant excerpts and a graphical analysis of price index performance since the piece appeared in Forbes magazine.


Most Resilient U.S. Real Estate Markets - Matt Woolsey, 6/8/07

“When it comes to real estate, the questions on everyone's lips are: How low is low, and when's the perfect time to buy back in?

That moment has passed in Seattle and Charlotte--both metros hit bottom in the first quarter of 2006 and have since posted price gains of 12.3% and 6.3%, respectively, according to National Association of Realtors (NAR) data.

Of the 40 largest metros that have yet to bottom out, which are ripe for investment?  Philadelphia and New Orleans.  Based on housing inventory and local economic conditions, both should hit price troughs by year's end and bounce back with moderate gains around 4% in 2008.”

…“Tampa is a perfect candidate for a V-shaped recovery, according to research from Moody's Economy.com, an economic analysis, forecasting and credit risk firm.  The local economy remains strong, and subprime lending is relatively low.  Tampa's problem?  A high investor share that lead to high vacancy rates.  When the market turned sour in 2005, more than 25% of Tampa homes were owned as investment properties.  Investors are quicker to flee during a downturn, thus creating a glut of available housing stock.  In Tampa's case, vacancy rates now stand at 3.5%.

"As investors exit, the market revives," says Mark Zandi, chief economist at West Chester, Pa.-based research firm Moody's Economy.com, as fewer speculative buyers results in a more stable market.  "Tampa's a pretty affordable market and first-time buyers can come in once prices fall."

Based on Moody's Economy projections, Tampa should burn off its excess inventory and hit a price trough in the first quarter of 2008, at which point prices are expected to increase by 10.6% the following year.”