As we wrap up 2023, it's a great time to reflect on the dynamic shifts that characterized the Tampa Bay real estate landscape this year and a glimpse into what we anticipate for 2024.
A Review of 2023
Last year proved to be a transformative period for the Florida real estate market, particularly in the Tampa Bay region. The unprecedented demand witnessed during the early days of the pandemic, driven by historically low interest rates, gradually evolved into a market grappling with rising mortgage rates, insurance costs, and the aftermath of a significant condo building collapse.
Despite these challenges, the property market in the Tampa Bay area demonstrated resilience, with prices holding relatively steady. The year served as a reality check for sellers, prompting a reassessment of expectations, while buyers gained newfound leverage in negotiations and property inspections.
Anticipating Trends in 2024
Looking ahead, here are my predictions for the Tampa Bay real estate market in 2024:
Interest Rates: I anticipate a gradual downward trend in interest rates, albeit not as dramatic as some may hope. Expect rates to fluctuate between the 6% and 7% range throughout the year.
Single Family Home Prices: With interest rates continuing to play a significant role and single family home inventory slowly increasing, I predict that single-family home prices will remain stable and some areas may experience a modest increase of 1-3%, while the areas further from city centers will experience slight declines.
Condo Prices: The completion of Milestone Inspections and Reserve Study requirements in 2024 is expected to increase condo inventory. As many HOA fees increase in the new year and with more special assessments likely to pass, I expect condo inventory to continue increasing in 2024. With this expected inventory increases, there will be more compeition between sellers to have their condo stand out and buyers will need to be incentivized, likely with completed renovations or lower prices, in order to purchase a condo this year with all the uncertainty around the new condo requirements. Smaller condo complexes, newer/renovated condos and well funded condo assocaitions will perform the best and still find buyers in a timely manner. HOA's with large special assessments may impact pricing dynamics.
Investors: A decline in interest rates from the federal reserve should incentivize investors to redirect funds from money market accounts to investments with higher returns. Generally speaking investors search for better returns in the stock market, single family homes/multifamily properties, businesses.
Rental Prices: The projection for 2024 suggests a notable increase in new apartment deliveries. This influx of inventory may introduce competition among landlords, potentially stabilizing or marginally reducing rental prices (1-3%). I would expect this to be more prevalent in areas with more new construction apartment and not as much in more developed areas with less land to build on.
Buyer Demand: We anticipate a strong start to the year, with a slowdown in the second half of the year due to economic factors, seasonality and the upcoming presidential election. Significant changes in buyer demand could be spurred by substantial drops in interest rates in the second half of the year.
Real Estate Market: Overall, 2024 is projected to be a more active real estate market compared to historically slow 2023. My expectation is that the market will gain momentum heading into 2025.
Alternative Predictions:
Recession: The predictions above are based on an expectation that there won't be a recession in 2024. In the event there is a recession, I would expect unemployment to increase, interest rates to drop, given the tight inventory home and many sellers locked in with low interest rates, prices would hold steady and potentially increase more.
Inflation Remains High: The predictions above are based on an expectation that inflation will continue to gradually come down. In the event that inflation remains high, this will likely cause interest rates to increase. If mortgage rates were to remain in the 7-8%+ range through the year, I would expect inventory to continue to accumulate, buyer demand to remain low and prices to drop 3-5%.
Please note that these insights are based on my analysis and what I'm seeing/hearing in the market. For personalized advice on interest rates and financial considerations, we recommend consulting with your mortgage lender and financial advisor.
If you have a property that you would like to discuss or want to come up with a strategy for your potential move in 2024, feel free to reach out anytime.
Happy holidays and wishing you all the best in 2024!
- Geoff
