Happy Monday, February 24, 2020
Today let’s take a look at what’s going on in the Greater Tampa housing market (includes the communities in the map below).
As you’ll see in the table that follows, all housing market metrics rose except for Median Days on the Market compared to January 2019. Median Days dropped 6.1% to 31 days. Month-over-month Total Sold Dollar Volume, Closed Sales, Median Sold Price and Average Sold price fell, while Median Days on the Market, Average Days on the Market and Average Price per Square Foot increased.
The data above includes all types of Greater Tampa housing, but let’s look more closely into the data for single-family homes. Closed Sales increased 14.1% compared to January 2019, as 1,809 SFHs sold. That was 700 fewer homes than in December 2019. (Just place your cursor on the trend line in the graph below to see the stats.)
The Number of Active Listings declined 16.3% from January of last year, as 5,616 homes were for sale (37 more than in December 2019). New Listings rose 5.7% from January 2019, as 3,022 homes came onto the market, 955 more than in December 2019.
The January 2019 Median Sale Price jumped 7.2% to $251,990 compared to January 2019. It was $6,010 lower than in December 2019. The Average Price per Sq Foot for Sold Homes rose 8.7% from January 2019 to $150/sq ft. The Median List Price increased 7.1% to $255,925 compared to January 2019. The Average List Price per Sq Foot climbed 5.5% to $173/sq ft compared to January of last year.
Supply and Demand
The supply of single-family homes fell 21.2% from January 2019 to 2.17 months. That was the same as December 2019. The Absorption Rate*, which shows the rate that homes sell during a given time period, rose 36.3% from January 2019 to 0.32. Currently, the Greater Tampa single-family housing market does not favor buyers or sellers. It is neutral.
*Absorption rate is calculated by dividing the number of sales in a given month by the number of available homes for sale. For example, if there are 100 homes listed for sale in a certain area, and 20 sold during the last month, the absorption rate is 20/100 = .20 or 20%.
*Buyer’s market: 16.67% and below
Seller’s market: 33.33% and above
Neutral market: 16.67% – 33.33%
After over a year of moderating home prices, it appears home value appreciation is about to reaccelerate. Skylar Olsen, Director of Economic Research at Zillow, explained in a recent article:
“A year ago, a combination of a government shutdown, stock market slump and mortgage rate spike caused a long-anticipated inventory rise. That supposed boom turned out to be a short-lived mirage as buyers came back into the market and more than erased the inventory gains. As a natural reaction, the recent slowdown in home values looks like it’s set to reverse back.”
CoreLogic, in their January 2020 Market Pulse Report, agrees with Olsen, projecting home value appreciation in all fifty states this year. Here’s the breakdown:
- 21 states appreciating 5% or more
- 26 states appreciating between 3-5%
- Only 3 states appreciating less than 3%
Many believe when real estate values are increasing, owning a home becomes less affordable. That misconception is not necessarily true.
In most cases, homes are purchased with a mortgage. The current mortgage rate is a major component of the affordability equation. Mortgage rates have fallen by almost a full percentage point since this time last year.
Another major piece of the equation is a buyer’s income. The median family income has risen by 5% over the last year, contributing to the affordability factor.
Black Knight, in their latest Mortgage Monitor, addressed this exact issue:
“Despite the average home price increasing by nearly $13,000 from just over a year ago, the monthly mortgage payment required to buy that same home has actually dropped by 10% over that same span due to falling interest rates…
Put another way, prospective homebuyers can now purchase a $48K more expensive home than a year ago while still paying the same in principal and interest, a 16% increase in buying power.”
If you’re thinking about purchasing a home, realize that homes are still affordable even though prices are increasing. As the Black Knight report concluded:
“Even with home price growth accelerating, today’s low-interest-rate environment has made home affordability the best it’s been since early 2018.”
In the spring, many excited buyers get ready to enter the housing market. Others continue dreaming about the homes they’d like to buy. The truth is, many potential buyers continue to dream longer than they need to, simply because they’re confused about the homebuying process. Thankfully, working with a trusted real estate professional can help ease those concerns and make the process to homeownership much easier to understand.
A recent survey conducted by Ipson and Freddie Mac reveals the confidence level of Gen Z and Millennial buyers regarding the homebuying process. The graph below shows the breakdown of the top results, clearly indicating there’s a significant portion of younger buyers who are not yet confident with some of the steps in the homebuying process.Between the homebuying process and the mortgage process, there are 230 possible steps in the transaction. With trusted professionals on your side, you certainly don’t have to know them all to have a successful experience.
There are many reasons why these steps can change as you move through each one. Depending on your personal circumstances, the term or your mortgage, and the type of loan you use, the path you take may need to vary. That’s why guidance and support from the experts is key.
In addition to the process itself, respondents in the survey definitely expressed concerns about understanding the types of loans available. Here are just a few of the basic loans to consider. Be sure to speak with your lender about the specifics of what will work best for you:
- FHA: Loans guaranteed by the Federal Housing Administration for first-time buyers. They generally enable qualified borrowers to enter the housing market with a lower down payment.
- Conventional: Loans that usually require a larger down payment. Repeat buyers usually use these types of loans since they have an established credit history as well as more money from the sale of their previous home (called equity) for a bigger down payment.
- VA: Loans available for Veterans of the U.S. Armed Forces and their spouses. They are guaranteed by the Department of Veteran Affairs.
- USDA: Loans for those living in rural and suburban areas. A qualified lender can issue a USDA home loan, and they are guaranteed by the United States Department of Agriculture (USDA).
Interest rates also popped up as a common area of confusion among Gen Z and Millennial respondents in the survey. With today’s rates hovering at near historic lows, it’s a fantastic time for buyers to get more house for their money in the current market. Why? When mortgage rates are this low and wages are increasing as they are today, overall affordability increases, enabling home buyers to stretch their mortgage dollars further. It’s just another area where a trusted professional can help simplify the process and give guidance along the way.
There are many possible steps in a real estate transaction, but they don’t have to be confusing. To understand your best course of action, let’s get together today to ensure you have a trusted advisor who will help you feel confident and informed at every turn.
February 20, 2020
The low mortgage rate environment continues to spur homebuying activity, with applications to purchase a home up fifteen percent from a year ago. We’ve seen new residential construction surge over the last few months, on pace to reach the highest level in more than a decade. This is a good sign for the inventory-starved housing market and is a promising indication for the spring homebuying season.
Thanks for reading Tampa Market Monday. If you want help buying or selling your home, please get in touch. We have sold over 5,000 homes in the Tampa area and our mission is “to elevate the practice of real estate to an art form — and to deliver a real estate experience that is re-imagined and extraordinary!
Have a Fantastic day!
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Thanks for taking time to read the Tampa Market Monthly! If you want to buy or sell a home or find out your home’s value please let us know. We’d love to work with you. You can reach me, Doug Bohannon or Dale Bohannon at 813-979-4963 or by completing this contact form. You can search all Tampa area homes for sale at www.teambohannon.com.
Have a Fantastic week!