2023 Third Quarter Tampa Bay Real Estate Trends
The housing market in Florida continues to benefit from a record number of people migrating to the state. Below are two statistics that speak to the unprecedented flow of people into Florida.
From July 2021-July 2022, nearly 444,500 people moved to Florida. Compared to the previous year, a gain of 185,000 was the most significant year-over-year impact of residents moving. Florida also ranked No. 1 in domestic migration, No. 2 in international migration, and No. 1 for the most people moving in daily at 1,218.
Migration is occurring both from within the U.S. as well as internationally. From the start of 2022 until February 2023, 506,000 out-of-state driver’s licenses were exchanged for Florida driver’s licenses.
This influx has provided a consistent demand for housing. West Central Florida is one of the prime destinations, with Tampa Bay, Sarasota, and Venice high in the rankings for desirable places to live. North Port (on the southern edge of Sarasota) is one of the fastest-growing towns in the country.
Offsetting the influx of people has been the rise in interest rates from historically low levels (below 4%). We have shifted from low-interest rates to keep the economy from collapsing during the pandemic to higher interest rates to bring inflation under control. The annual inflation rate in June was 3%, providing encouragement that a recession may be modest while bringing inflation down to the goal of 2%. For mortgages, a rate between 5.5% and 7.0% has been the norm over the past 50 years.
The higher interest rates of today have played a major role in the shrinkage of inventory. Owners of homes with mortgages at 3-4% are reluctant to put them on the market, knowing their payments will significantly increase even before they buy a more expensive home. In areas with large tracts of undeveloped land, we see new developments quickly springing up.
Homes on the market rose consistently from the beginning of 2022 through November 2022. Since then, we have seen a steady decline, although still above the prior year until June. We anticipate inventory will remain in short supply through the remainder of 2023.
Sales of homes have remained low, at levels roughly equal to 2014 sales. A limited supply of homes will continue to make purchasing a home challenging, with competition in many areas of West Central Florida.
The average home price has risen since January 2023 and has returned to the high of $400,000 set last June. Despite higher interest rates (and therefore payments), limited supply has kept the average home price at record levels with no significant correction in sight.
So what does that mean for the home buyer or seller? The next 12 months should represent a relatively stable time in the real estate market. You should be able to sell your home for a reasonable price (significantly more than 2-3 years ago) as well as buy a home with stable pricing and reasonable rates by historical standards. And don’t forget, if interest rates drop, you are always able to refinance your mortgage. All things considered, it remains a good time to purchase a home.