Tampa Bay’s real estate market is one of the most popular in the country. But that popularity is just one of the challenges aspiring homeowners have faced this year. Rising mortgage rates and property prices still cast a shadow over the dream of buying a home.
The Tampa Bay housing market has undergone significant transformations since 2021 when historically low interest rates triggered a buying frenzy. Today, the market has cooled considerably, but that hasn’t necessarily translated into an advantageous environment for prospective buyers.
August, 2023 data on home sales from Greater Tampa Realtors’ shows there’s been a 9.1% decline in sales year over year. Homes are also staying on the market for extended periods, with the median time to sale increasing by 17.6%. So why hasn’t the cooling market resulted in more affordable housing options?
University of South Florida finance professor Lei Wedge told the Tampa Bay Times recently that the expectation was higher mortgage rates would push home prices down. That hasn’t happened. Instead, the median sale price in the Tampa metro area has increased by 4% since the previous year.
Another issue that propping up prices is a shortage of available homes. The number of active listing has fallen by 17.4% compared to last year and as a result there’s just a two-month supply of inventory. Potential sellers are hesitant to list their properties because they may have locked in record low mortgage rates during the peak of the pandemic, and current rates have surged to approximately 7%.
Professor Wedge thinks housing prices have finally peaked, and are very unlikely to ever return to pre-pandemic levels. For homebuyers who can’t wait, new construction homes are a viable option to get the house of their dream. Many builders are offering incentives such as covering closing costs or providing mortgage buy-downs, effectively reducing loan rates for the initial years.
In the challenging landscape of Tampa Bay’s housing market, homebuilders and support industries are being creative and adaptable, which is essential for navigating the ever-changing terrain of Tampa Bay’s housing market.