'Purgatory' is One Way to Describe Tampa Bay's Market

Tampa Bay's housing market was seen as somewhat undervalued in the late 90's. That all changed with the "boom" of 2000-2005. Now at least one expert sees a gloomy outlook for the Tampa Bay area...

Robert Toll sure knows a lot about luxury home building and even more about surviving lousy housing markets. The CEO runs Toll Brothers, a Fortune 500 company with at least four dozen housing communities in Florida, including the snazzy Estates of Harbour Isles in Apollo Beach.
After listening last week to Toll discuss his company and the state of housing, I'm just glad he was never a teacher and I was never his student. He's obviously never heard of grade inflation - that Great American Tradition - when he assesses each of the Toll Brothers markets across the country. Guess which ones get the lowest grades?

Las Vegas. And Tampa. Each, Toll says, gets an "F-minus-minus."
Holy two-by-four! I was guessing maybe a "D" for Tampa. I did not realize you could sink lower than an "F." Toll speaks with a deadpan, seen-it-all, yet polite, tone. He tells analysts who follow Toll Brothers that markets are so bad that he must separate "F" markets from "F-minus" markets from "F-minus-minus" markets. These gradations, he says, go "from miserable to outright purgatory."

Now, just to clarify Tampa's housing status, "purgatory" is defined as "a place of temporary punishment or remorse." Not all Toll Brothers markets are so sinful. The CEO gives a "B-plus" to markets around Hoboken, N.J., and a "B" to parts of Connecticut. But he doles out many an "F" to Massachusetts, Rhode Island, Illinois and Chicago as well as Arizona, Minnesota, Charlotte, N.C., and Jacksonville. Orlando almost shines, by comparison, with a mere "D-minus."

In Hillsborough County, Toll's Apollo Beach development of homes ranges from $600,000 for the five-bedroom/five-bath "Regalo" home to $340,000 for the 3/2 "Mariner." Other projects in the state run into the millions. Toll ticks off the previous housing downturns of 1974, '81-'82 and '88-'91 as most Floridians can cite years of bad hurricanes. But this downturn, he says, is worse than the last one.

Lately, the pace of customers backing out of their orders is up sharply. It's not that Toll's upscale customers can't get mortgages. It's that they can't sell their upscale homes. The CEO explains why people are backing out of deals: 18 percent can't sell their homes; 17 percent walk away because they don't see the value in this rough market; 29 percent involve people who lost a job, had to move, have medical issues or died.

Toll hopes the 2008 presidential race helps his business. Not for the change of administration, but because newspapers will write more about the campaigns on their front pages - and less on the housing crisis. Maybe he's right. But all bets are off in '08 if he gives us an "F-minus-minus-minus."

By Robert Trigaux, Times Business Editor. Published November 11, 2007. Click here to read the original article