William Surgeon and Anthony Pernicka were renting in Brandon three years ago when they fell in love with a fixer-upper on Central Avenue in Seminole Heights.

They bought the three-bedroom home for $184,000, gutted and redesigned it. They redid the ceilings and hardwood floors and landscaped the yard with a new irrigation system, a deck and spa.

They enjoyed renovating so much, the couple decided to buy another house and do it all over again. They put the Seminole Heights house up for sale for $350,000 in June - during Hillsborough County's slowest housing market in seven years.

They immediately got, and rejected, a lowball offer.

"Absolutely not," Surgeon said. "With the market the way it is, people have a connotation you can come in and steal them."

Surgeon's resolve helps explain a mystery that Carlos Fuentes, president of the Greater Tampa Association of Realtors, calls "the $64,000 question":

Why aren't house prices plunging in Hillsborough County when the supply has quintupled in the last two years, and sales have slowed by more than half?

Clue No. 1, Realtors say, is sellers' denial. Many don't accept that the blank-check sellers' market of 2005 has evaporated, replaced by a leery buyers' market.

They won't settle for less than what they feel their house is worth - especially in Seminole Heights, said Realtor Steve Johns of the Heights Group.

"We've seen five, six, seven years of being one of the top areas in greater Tampa Bay for increasing property value," he said. "So when you've watched all of your neighbors sell their houses at outstanding profits, it's a little hard to swallow even if you've missed that time frame."

Clue No. 2: While home builders are out-dealing individual sellers, they are reluctant for several reasons to cut prices.

"We like to try to maintain our price," said Al Torchia, senior project manager at Toll Brothers' Estates at Harbour Isles in Apollo Beach. "It keeps the continuity in the neighborhood. The people that have bought don't feel like they are losing money."

Clue No. 3: Hillsborough has an ample supply of potential buyers ready to pay a reasonable price, Realtors say. Roughly 1,000 houses a month are selling. Many home seekers are moving to Tampa for jobs. Others enjoy bargain-basement rents in the glut of investor-owned houses, waiting to buy when prices sag enough.

'Huge bonuses'

Nationwide, experts predict the housing slump will persist into next year. But last month, Tampa might have received a hint that the bottom is in sight. The Greater Tampa Association of Realtors reported that its supply of homes for sale shrank a hair, after mushrooming over two years from 3,700 houses to 20,800.

Meanwhile, the price/sales disconnect is statewide. The Florida Association of Realtors reported that the median house price in the state was only 4 percent lower in the second quarter of this year than in the same quarter the year before. But the pace of sales was 30 percent lower.

The Hillsborough County Property Appraiser's Office calculates that prices during the second quarter were only 1.2 percent lower than the same period last year. Rose Residential Reports, a Tarpon Springs research firm for the home-building industry, reports that prices for new homes selling during the first seven months of this year in Hillsborough were running 4 percent lower than from comparable sales last year.

Together, those numbers suggest that Hillsborough County's builders account for nearly all the price cutting here, which isn't saying much.

Many builders are emphasizing nonprice concessions.

Raymond Castro and Nancy Ribot bought a five-bedroom house in New Tampa last month for $296,000.

The builder, M/I Homes, contributed a stainless-steel refrigerator, free. Washer and dryer, free. Blinds, free. Stove, microwave and dishwasher, free. Upgraded kitchen cabinets, free.

"They were trying to convince us basically to stay with the company," said Castro, a 31-year-old Air Force captain who transferred here in July.

National builder KB Home started offering a special deal in the Tampa Bay area several months ago, spokeswoman Carla Kane said.

Of the total purchase price, 4 percent goes toward closing costs.

Home builders also are reaching out to real estate agents.

"Builders are offering commissions anywhere from 6 to 10 percent," said Ginger Perkins, a Tampa Realtor. "Some of them are paying 3 percent, plus huge bonuses."

Nationwide, incentives such as the commissions and freebies cost Lennar Corp. an average of $43,700 per house in the second quarter this year, according to a company report. The parent company of Engle Homes reported that its incentives in Florida averaged $53,800 per home in the second quarter.

'Paper gains'

Aggressive concessions might explain why Hillsborough County's noticeable price declines in the second quarter occurred in neighborhoods where home builders were most active during the boom.

Today, areas such as South Shore, the Race Track Road corridor and New Tampa might have the largest surpluses of houses to unload. They also might have some of the largest numbers of investor-owners, because that's where homes were available when the 2005 buying frenzy mobilized investors.

"Those are the areas that came down the most, because the prices were the most inflated," said Darragh, the New Tampa Realtor.

Brad Monroe, another New Tampa Realtor, tells the 48 agents in his Coldwell Banker office that home prices should be dropping about 1 percent a month. But they catch resistance from sellers.

"They don't want to lose their paper gains," Monroe said.

Realtors say many clients cannot afford to lose those gains, because they obtained home-equity loans, borrowing against the soaring value of the house.

"They paid for boats, and BMWs and trips and whatever," Perkins said.

Many sellers in Old Seminole Heights have too much invested to concede prices, says broker Mike Massimini.

"People have bought the homes, spent several years fixing it up, financed, and now they're in the situation where they have to sell it at almost full price."

Surgeon and Pernicka stuck by their full price and closed on the sale of their home this week - three months after putting it on the market.

If necessary, Surgeon said, he would have waited three years.

Staff writer Catherine Shoichet contributed to this article. Alexandra Zayas can be reached at 226-3354.