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Why are so few Tampa Bay houses for sale? They're being rented

Oreste Mesa Jr. owns a modest 40-year-old house in West Tampa just off MacDill Avenue. It's an area where many homeowners are hearing the siren song of builders and cashing out while the market is strong.

But Mesa has no intention of joining them. Since he and his wife stuck a "for rent" sign on the lawn this summer, they've had their pick of tenants from among 80 callers.

"We don't need the money as far as selling it," Mesa says, "and right now we get more in rent than we would if we invested in something else."

It's a mindset that's contributing to the critical shortage of homes for sale in the Tampa Bay area and many other parts of the country.

Even as the median price of a U.S. house is at a record high — $263,800 — many owners are choosing to lease out their properties rather than sell. It can be a smart move at a time when millions of people are renting, either because they want to or because they don't have the money or good enough credit to buy. But the increase in rentals is shrinking the supply of available homes — and driving up prices — just as the huge millennial generation reaches its prime home-buying years and many baby boomers are looking to downsize.

PREVIOUS COVERAGE: Tampa Bay home prices still climbing, though more slowly

"Thousands of single-family homes that were once bought and sold every few years prior to the recession have now been converted into rental properties, trading hands much less frequently and further contributing to inventory shortages," Svenja Gudell, Zillow's chief economist, recently warned.

That dramatic shift is reflected in the drop in homestead exemptions in the Tampa Bay area.

In Pinellas County, the percentage of owner-occupied houses with the basic $25,000 exemption fell 8 percent between 2003 and last year.

In Hillsborough, the percentage of homesteaded properties plunged from 81 percent in 2003 to just 67 percent this year.

Not all of the decline can be attributed to renters — second homes and vacant homes don't qualify for exemptions. But there's no question that many houses once lived in by their owners are now being leased.

After the housing crash, big institutional investors like Blackstone's Invitation Homes and Starwood Waypoint snapped up thousands of bay area foreclosures. The two companies, which earlier this month announced plans to merge, now own and lease out an estimated 8,000 Tampa Bay homes — many of them the 3-bedroom, 2-bath houses that would be attractive to buyers if only they were for sale.

"It's pulling all of this inventory out of circulation," says Irwin Wilensky, a St. Petersburg broker.

RELATED COVERAGE: Huge rental-home companies active in Tampa Bay agree to merge

Big-time investors aren't the only ones drawn to rentals.

David Eaton owns some small houses near the Gateway shopping center in St. Petersburg. He rented out two "almost instantly" this winter and is fixing up another.

"The rental business has just gone stellar," says Eaton, a lawyer. "I'm amazed sometimes, and the caliber of tenants is pretty strong, too."

With its proximity to schools, stores and Fossil Park, the area attracts many young families who can't afford to buy but can manage rents that typically run about $1,100 to $1,300. It also has drawn renters who lost their homes to foreclosure.

"The caliber of tenants after the bust shot way up," Eaton says. "These are people who care about their homes. They didn't call me with very cockamamie problem' they knew how to fix things and maintain the property."

Eaton acknowledges that he's also had a "panoply of tenants hassles" and that his wife has been urging him to sell the houses. But he figures they will continue to rise in value, especially if a large, run-down trailer park nearby is ever razed for redevelopment.

What might prompt Eaton to sell? "I guess I'm waiting for (the market) to get so good I can't help it otherwise," he says.

On the other side of the bay, Mesa says he hasn't been tempted to sell either of his rentals — one off MacDill Avenue, the other near Raymond James Stadium — despite frequent offers from builders who see West Tampa as the new frontier now that land prices in South Tampa are so high.

"If we sell, we are going to be hit with such a big tax burden it isn't worth it," Mesa says of the houses he and his wife own outright.

Instead, the couple expects to get $1,450 a month rent for the three-bedroom, one-bath house on North B Street, a block from MacDill and close to four big new homes that have sold for more than $440,000 apiece in the past few years. As Tampa housing prices climb, the demand for rentals is so great that more than a dozen people have filled out applications.

Wiser from experience, Mesa requires background and credit checks. He has hardened himself to those "poor things who plead for a break on the rent.

"Every time you try to be nice, you get kicked in the butt,'' he says. "So this is the way it is. If you like it, fine. If not, no.''

Mesa, who has a security business, finds tenants and takes care of his properties himself. Many owners, though, turn to professional property managers.

"I would say that our business is booming,'' says Kris Knutson, business development director of Rent It Network in Tampa. "We put a home on the market and usually in the first seven to 10 days we have multiple applications. We bring on about 20 or 30 new properties a month and I have not seen a slowdown in the past three years.''

Among those leasing out their homes are many who bought at the peak of the boom and couldn't sell for the amount they owe. Others include members of the military who have been transferred from MacDill Air Force Base but plan to return to the bay area.

Knutson finds that South Tampa is a particularly hot market for rentals. Her company recently leased a home on Davis Islands for $2,795 a month to a doctor who is doing his residency at Tampa General Hospital but is new to the area and not yet ready to buy. The owner bought the property as a future retirement home but is still living up north.

Rent it Network handles homes throughout the bay area, but "obviously the ones closest to infrastructure, jobs and schools are the ones leasing quickly," Knutston says.

Property management companies typically charge a "tenant location" fee equal to 75 to 100 percent of the monthly rent, plus a 10 percent monthly fee thereafter. Owners also are billed for repairs and replacement of appliances as needed.

Jackie Frey, regional director of Bahia Property Management in Tampa, has recently noticed a change in the bay area home rental market. What she calls "accidental landlords" — those who have been renting out their homes for years because of military transfers or job relocations — are deciding to go ahead and sell while the market is strong.

"We've got an average of eight to nine houses going out the door for sale each month (whereas) maybe we had one every few months," Frey says.

At the same time, investors are hanging on to their properties because rents have risen significantly. Yet tenants are more likely to renew their leases rather than have to start all over with hefty deposits at another place.

It used to be that as many as 40 tenants moved out of Bahia-managed homes in a typical month.

"In July, we had half that,'' Frey says. "They know how expensive rents are out there.''

Contact Susan Taylor Martin at [email protected] or (727) 893-8642. Follow @susanskate

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