First and foremost, I hope you had a great Thanksgiving with your friends and family! As we say goodbye to November, it's my pleasure to share some promising developments in the Tampa Bay real estate market.
Interest Rates: At the start of the month, the average 30-year fixed-rate mortgage was navigating the high 7's/low 8's territory. However, as November unfolded, it took a quick drop back to the the low 7's. While recent buyers may not feel the need to write home about this change, home buyers this year may appreciate it more as the start of a new trend. More significantly, many are interpreting this decline as a sign that the Federal Reserve has wrapped up its rate hikes, potentially paving the way for rate cuts in the coming year. This scenario could indicate enhanced affordability for would be homebuyers. Yet, it's important to acknowledge that if rates were to go back up, that would likely eliminate this newfound optimism.
Prices: Throughout much of the year, prices held steady; however, as we navigated the slower summer and fall market, the influx of new inventory continued to come on the market and has accumulated which has contributed to heightened competition among neighbors. Some sellers are adopting a more negotiable stance and accepting prices below the comparable sales, "comps", set by similar homes earlier in the year.
Given the historic appreciation witnessed in the past few years it shouldn't be a surprise if there is some correction in prices, especially given the current elevated interest rates, increased insurance costs, and higher property taxes associated with these new property prices. It's important to remember that it's not uncommon to witness some discounts during this time of year given the traditionally lower buyer demand between the holidays. Of course, some areas perform better now (i.e snow birds and people relocating for the beaches) while suburbs or areas geared more to the school year may not have as much interest to buy now. With this all said, unique homes and properties that are renovated are still selling quickly and fetching great prices as there is a lot of demand for these types of properties and not much supply.
Inventory: In an unexpected twist, inventory levels are charting an unusual course as they were rising steadily and we have seen the inventory increase more rapidly in recent months. In Pinellas, we have witnessed a 60% increase in single family homes for sale since July of 2023 and a 40% increase in condos for sale. For context, we currently have around ~2200 homes for sale, in July it was around ~1300 and when we were in the heat of the pandemic in February 2022, there were only 482 homes for sale in all of Pinellas County.
In Hillsborough, we are seeing a similar trends, but not as pronounced as in Pinellas. The inventory of single family homes for increased 33% since July of this year and 43% in the number of condos. Currently there are around ~3200 homes for sale in Hillsborough and ~600 condos for sale.
Currently I am seeing more homeowners preparing and looking to sell, which leads me to believe there will be more inventory coming early in 2024. I am expecting more buyers to enter the market in the new year as well which should help absorb some of the new inventory coming. The main question is if enough buyers will come back or if the inventory will continue to increase. If inventory continues to increase prices should continue to go down to attract buyers. If the demand matches the new inventory, I would expect prices to hold steady.
Investors: Investor demand continues to remain strong, but given the increase in interest rates and rents staying flat or in some cases going down, it is becoming increasingly more difficult to make the numbers attractive to an investor. I am seeing multifamily sellers becoming very negotiable on price to help make the numbers pencil out. There still is money to be made investing in Tampa Bay real estate, but generally it is taking some work and/or creativity to generate hgih returns.
Each neighborhood, suburb, home, and condo forms its own unique submarket, showcasing distinct performances. If you would like to discuss the specifics of a particular property, feel free to call or message me anytime.
