TAMPA - With more than 30,000 pre-owned homes on the market in the Tampa Bay area, builders of new homes face fierce competition for buyers.

Now builders have a new competitor: themselves.

As builders try to unload finished inventory or secure sales contracts to build new ones, they increasingly are competing against homes they recently sold but have come back on the market as resales, either from people seeking to avoid foreclosure or from banks that have seized properties.

Indeed, the number of fairly new homes taken back by lenders in foreclosure is rising in the Bay area.

This all represents a difficult marketing challenge for builders because lenders, anxious to rid their books of foreclosure homes, tend to slash prices significantly lower than what it costs builders to construct a similar home, said Jack McCabe, of McCabe Research & Consulting in Deerfield Beach.

"This renders builders uncompetitive," McCabe said.

"If you can buy a new home from a developer for $300,000, or a year-old foreclosure home just like it for $200,000, it's a no-brainer. Especially when it's in the same neighborhood."

Consider these homes:

•A 4-bedroom, 2,134-square-foot home built in 2005 is on the market in the Live Oak Preserve neighborhood in New Tampa. It's in foreclosure. List price: $202,500. The builder, Engle Homes, has a similar, recently completed home in the same neighborhood on the market for $329,990.

•A 5-bedroom, 3,192-square-foot home in Thousand Oaks East in Trinity in Pasco County recently sold for $265,000. The same home sold in May 2006 for $397,500. The builder, Lennar, is selling a similar model at a nearby neighborhood for $319,900.

•A 3-bedroom, 1,702-square-foot home in Wesley Chapel's Meadow Pointe community recently sold in foreclosure for $190,000. It was built in 2005. A few streets away, the builder, Tripp Trademark Homes, is trying to sell a similar model for $219,900.

Mike Tripp, vice president of Tripp Trademark, said the company sometimes gets undercut by foreclosure homes but he said the company doesn't cut prices dramatically just to compete.

"We've made adjustments, yes," Tripp said. "But there's more to it than just pricing. When you buy a foreclosed property, it's not the same as buying a new home."

More Foreclosure Suits Filed In January

Competition from foreclosures on the market is worsening. Florida's foreclosure rate ranked second in the nation in 2007. Closer to home, the Tampa Bay area ranked 23rd among 100 metro areas for its foreclosure rate last year.

Just last week, Default Research of Mount Pleasant, Pa., said it tracked 919 new foreclosure lawsuits, which lenders file to take back properties, in January in Hillsborough County. That's up 9.7 percent from 838 cases in December.

The weight of so many resales and foreclosed properties on the market leaves builders in a predicament, said Mike Larson, an analyst with Weiss Research in Jupiter. Their inventory of homes often just can't compete with the newer foreclosure properties. But if builders don't continue to build some homes, they won't be in business when demand improves.

Builders are chipping away at their completed inventory by offering free upgrades, such has granite countertops and hardwood flooring, and dropping prices.

They've also slowed construction dramatically, says Metrostudy, a Houston-based housing research firm. Homebuilders in Hillsborough, Pinellas, Pasco, Hernando and Citrus counties slashed construction by 59 percent in 2007, compared with 2006. They also broke ground in the five-county area on 50 percent fewer homes in the fourth quarter of 2007, compared with a year ago.

The company does not track how many homes each individual builder constructs each month or has on the books. However, Metrostudy counted 3,551 finished, vacant homes in the five-county area in the fourth quarter. Those homes are owned either by the builder or by investors and have never been lived in, according to Metrostudy.

The vacant, new homes are competing with 4,159 homes built in 2004 or later that have gone into foreclosure, according to ForeclosuresDaily .com, a St. Petersburg company that tracks foreclosures. Those homes are in Hillsborough, Pinellas, Pasco, Hernando and Citrus counties.

Tampa division president for Windward Homes George Schulmeyer said foreclosure competition "is absolutely a factor we think about."

"We're starting a couple homes a month in some communities and none in some that are struggling more," he said. He re-evaluates the market situation every 60 to 90 days before approving the construction of additional homes.

It's a tricky market, Schulmeyer said. A couple of years ago, buyers put down contracts for new homes many months in advance. But now, because there are so many homes on the market that are "almost new," there are more choices than ever.

Investors, Bad Mortgages Part Of Problem

Larson, the housing analyst, said much of the problem builders face was caused by the profitable market they enjoyed during the housing boom.

"One of the traps builders got into was that they didn't realize, or mind, how many investors were buying their homes," Larson said. "Those are among the first to throw in the towel when times get tough."

Another part of the problem, he said, is the mortgage crisis.

It was so easy to get home loans during the housing boom that many buyers took out risky loans so they could afford to buy a bigger, more expensive home. Many of the interest rates on those loans have adjusted, raising homeowners' mortgage payments beyond what they can afford.

The combination has changed the face of foreclosed properties. It has made them more attractive to buyers.

"Everybody tends to think foreclosures are crummy, old homes with horrible lawns and rotting roofs, but a lot of the homes we see in foreclosure now are pretty pristine," Larson said, noting that new subdivisions across the Tampa Bay area are dotted with homes in foreclosure.

Foreclosure competition was among the concerns voiced last week at the International Builders' Show in Orlando, said Elliot Eisenberg, a senior economist with the National Association of Home Builders.

Builders are slowing their construction pace, Eisenberg said, but they shouldn't slow down too much.

"You don't want to build too many homes, but you don't want to lose workers and not be ready to ramp back up when the market picks up," he said.

Economists, such as Eisenberg, think the housing market will begin to improve during the third quarter, July to September, of this year.

Reporter Shannon Behnken can be reached at sbehnken@tampatrib.com or (813) 259-7804.