Tampa Housing Market Forecast

The last year has been a challenging one for all housing markets. With rising mortgage rates and the resulting pullback in demand, prices have fallen off — at least slightly — in most parts of the country.

Tampa, Florida, is no different, but it’s still largely holding steady thanks to the region’s strong job market, low inventory levels and ever-growing population.

As for 2023, it seems like another strong year is ahead — one where demand is rising, supply is low and prices grow, at least on move-in-ready properties for the Tampa-St. Petersburg-Clearwater metropolitan statistical area.

“I’m actually starting to see multiple offers again,” says Kseniya Korneva, a real estate agent with Pineywoods Realty in Tampa. “It’s almost as if we have two housing markets right now. The homes that are priced competitively, are in great condition and in desirable neighborhoods are likely to see multiple offers, whereas the houses that require some updating or are in less popular neighborhoods are sitting 30, 60 or even 90 days on the market.”

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How the Tampa Housing Market Changed in 2022

In the single-family sector, construction activity was pretty volatile in 2022. It peaked in May at 1,603 permits but bottomed out in December with 882. Things have picked up in recent months, but overall activity in the single-family arena is still much lower than a year ago.

Over the last three months, Tampa has seen 2,808 single-family housing permits approved. One year earlier, it was 3,949 for the same time period, marking a 29% decrease in just 12 months.

Permits in the multifamily sector have been on a different path, skyrocketing from just over 326 in January to more than 1,466 by November. Permits have dipped slightly since that peak, but significantly more multifamily permits are getting approved these days than a year ago.

In the last three months, Tampa has seen 4,046 multifamily housing permits approved. A year prior, it was a mere 977. That’s a 314% increase in a single year.

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Tampa Housing Supply and Demand

Tampa’s supply of for-sale listings currently sits at 2.4 months. While that’s up 1.6 months compared with last year, it’s still well below the levels of a balanced market (this is typically considered 6.5 months of supply). It’s also slightly below the nation’s 2.6-month inventory.

“The higher rates and fear of the national economy are discouraging some homeowners from listing their homes,” Korneva says. “The current state of the economy is so volatile that many are nervous about making big life changes right now.”

Rental vacancies have decreased a small amount compared with last year, though Tampa’s 7.5% vacancy rate is notably higher than the country’s 5.8% average. This could be due to that stark jump in multifamily permits that were issued last year — and the increase in rental supply it likely led to.

With inventory low and mortgage rates high, it’s no surprise that consumer sentiment is down at 64.9. According to a survey from the University of Michigan, overall consumer sentiment has dropped 2.3 points in the last year.

Though it has ticked up since its trough last summer, consumers are still wavering a bit. Data from the Mortgage Bankers Association for the week ending March 31 shows mortgage loan applications are down 4.1% compared with one year ago.

Despite this, Korneva says she’s starting to see bidding wars again — but they’re not the high-stakes ones seen in the recent past.

“In the multiple offer situations, winning offers aren’t as unattainable as they were last year,” Korneva says. “Buyers are keeping their inspection periods, not offering appraisal gaps, and some are even getting closing cost incentives. At the start of the year, sellers still hoped to get top-dollar in record time, but now that we’ve been in this stable market for a few months, most are starting to adjust their expectations.”

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Median Home Price in Tampa

The median home price in Tampa is $364,000, down from its peak last summer ($393,000) but still 3.1% higher than this time last year, according to Redfin. It’s also below the nation’s median of $387,000.

“I do not expect prices to drop any time soon,” Korneva says. “Our inventory is still very low, and many who bought their home at a rate lower than 4% are now turning their homes into rentals which causes additional pressure on the housing market.”

Tampa rents have increased nearly 5% in the last year, hovering under the $2,100 mark since December, according to the Zillow Observed Rent Index. The national average is just $1,978.

Part of why Tampa’s home and rent prices continue to grow is the area’s rising population. According to the U.S. Census Bureau, Tampa gained over 4,000 new residents between April 2020 and July 2021. Since 2010, more than 50,000 new residents have moved to the area.

Unemployment Trends in Tampa

More than 1.5 million people were employed in the Tampa area job market in February, with 80,000 new jobs added in just the last year, according to the Bureau of Labor Statistics. Unemployment in the city as of January was just 2.6% — a decrease of 0.7% in the last year and nearly a full point below the nation’s 3.4% unemployment rate.

Employment in the metro’s construction sector has been on the rise, too. According to the BLS, 93,500 were employed in construction jobs in Tampa as of February. That’s a gain of nearly 6,000 jobs in the last two months.

The area’s low unemployment rate should help keep foreclosures in the metro low. The current foreclosure rate for Tampa sits at 0.5%, according to Black Knight. That’s up from the 0.4% rate seen most of last year and is also slightly above the national average (0.45%).

Builder Confidence in Tampa improves

Overall builder sentiment has improved considerably since it bottomed out in mid-2022. The National Association of Home Builders/Wells Fargo Housing Market Index currently rates local builder sentiment at a 50 out of 100. That’s a drop from the 81 rating seen a year ago but is up 19 points since just December.

High construction costs are one likely reason builder sentiment hasn’t improved either. According to the U.S. Census Bureau, national construction costs are currently up 10.2% compared to last year (though they’ve dipped slightly since December).

Also, according to Korneva, builders may be having trouble selling their current inventory, thanks to today’s higher mortgage rates.

“Last year, many builders in the area had waiting lists, and some even had bidding wars,” Korneva says. “Now, there is much more builder inventory, and most are offering closing cost incentives, as well as interest rate buydowns. Builders are also slashing prices and are eager to offload their inventory.”

Nonresidential construction, which is measured using architectural billings, has fallen quite a bit since peaking last January. According to the Architecture Billings Index, though, it’s only slightly below the numbers seen in 2017-2019, prior to the pandemic.

Tampa Real Estate Market: Predictions

With unemployment low and builder and consumer confidence improving, Tampa’s real estate market is likely to remain relatively steady for the foreseeable future. Our forecast, which predicts single-family building permits will decrease slightly in Tampa over the next few months, should only reinforce the area’s low supply levels and keep prices elevated.

In the multifamily sector, things could be similar. Our forecast projects that permits will be much lower by summer, which could limit supply and put upward pressure on rents.

“I think Tampa’s prices will continue to grow,” Korneva says. “We’re in a unique bubble compared to the rest of the country. Lots of investors are purchasing our inventory, and many remote workers are moving here since we have no state income taxes.”

More from U.S. News

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Tampa Housing Market Forecast originally appeared on usnews.com

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