Real estate market softens as flippers' tactics flop.

Real estate market softens as flippers' tactics flop.
Investors trying to shed properties offer incentives while builders competing with them slash prices.By JAMES THORNER, Times Staff WriterPublished November 13, 2005
LAND O'LAKES - In Ballantrae, Pasco County's bestselling neighborhood of new homes in the past year, signs of a real estate boom could be starting to sputter.
And that could be good news for house hunters put off by high prices and poor selection for the past couple of years.
Real estate speculators who grabbed lots last year are having trouble selling their marked-up houses for the prices they want.
An illustration of the investor home glut is Glenapp Drive in Ballantrae, a neighborhood under construction north of State Road 54 between U.S. 41 and the Suncoast Parkway.
On Glenapp, five new, nearly identical 2,657-square-foot houses are for sale. Their owners are asking for an average of $345,000 for houses they bought for between $230,300 and $240,199 in the summer.
No one's buying - not yet anyway. And why should they? KB Home, the model's builder, markets the same house a few miles up the road for less than $300,000.
"We're going into a buyer's market," said Pam Koenig, a Land O'Lakes real estate agent for one of the five Glenapp homes. "It has to be."
What we could be witnessing is the downside of the investor mania that has pumped up the housing market the past two years. In a search for gains unmatched on the sluggish stock market, speculators gobbled up lots across Pasco.
This fall, many of those investors are trying to discard the properties simultaneously.
"Investors are competition for us. They actually become hidden inventory," said Kevin Robles, president of the Pasco Building Association and an executive with McCar Homes.
The market dilution is apparent in another Land O'Lakes community, Lake Talia, west of U.S. 41.
One of its two builders, US Home, recently discounted its homes and undercut investors. A sign announcing a "builder's closeout" appeared on U.S. 41.
US Home reduced one model formerly listed for $440,000 to $420,000. A speculator was reselling the same model in Lake Talia for $439,000.
At least 20 Lake Talia homes fill the Multiple Listing Service, the detailed inventory of homes for sale that real estate agents consult.
One Talia investor resorted to a hard sales pitch to shed his property: "Reduced for quick sale!!" and "SELLER WILL PAY $4,000 TOWARDS BUYERS CLOSING COSTS."
In another sign of softening, two builders, Morrison Homes and KB Home, have peppered Pasco real estate offices with offers of $3,000 bonuses for agents who steer them customers.
"The market's slowed down a great deal," Koenig said. "There's so many real estate flippers, it's diluting the market."
Pasco builders reported that about 25 percent of their sales last year and earlier this year were to investors. For some builders, it may be an undercount.
Many investors hide their intentions. They will say they are buying for themselves and later claim to have changed their minds before moving day. A son will build a house for an "elderly parent," who never materializes after closing.
Many builders rewrote sale contracts to discourage speculators - for example, mandating that a person hold a house for a year - but builders may welcome them back as sales soften.
The Glenapp Drive phenomenon could herald further localized home gluts. Ballantrae is Pasco's housing leader, recording 584 starts the past year, according to the firm Metrostudy.
While the housing market shows no signs of tanking, analysts expect a leveling off of prices that climbed 30 percent the past year.
That means investors might have to make do with lower returns, said Koenig, whose clients are listing a 2,657-square-foot Glenapp house for $349,900, $108,000 more than they paid for it in July.
Another investor markets the same house on the same street for $319,900. The cheaper house has been listed for seven weeks.
"If you are one of those five people on Glenapp and you want to sell, you adjust your price accordingly," she said.