Happy Monday, March 23, 2020
I know there is a lot of uncertainty right now due to the Coronavirus, but we’re committed to continuing to help you navigate what’s ahead in the Tampa real estate market. We will adapt as necessary to best serve our current and future clients. Most importantly, we hope you and your family stay healthy during these difficult times.
Now, let’s review how the Greater Tampa housing market (includes the communities in the map below) fared in February 2020.
As you’ll see in the table that follows, all housing market metrics rose except for Median and Average Days on the Market compared to February 2019. Median Days dropped 17.1% to 34 days, while Average Days fell 1.6% to 60 days. Month-over-month, Total Sold Dollar Volume, Closed Sales, Median Sold Price, Median and Average Days on the Market rose, while Average Sold Price and Average Price per Square Foot decreased.
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 7.7% compared to February 2019, as 2,206 SFHs sold. That was 397 more homes than in January 2020. (Just place your cursor on the trend line in the graph below to see the stats.)
The Number of Active Listings declined 18.1% from February of last year, as 5,381 homes were for sale (235 fewer than in January 2020). New Listings rose 3% from February 2019, as 2,923 homes came onto the market, 99 less than in January 2020.
The February 2020 Median Sale Price rose 5.3% to $258,000 compared to February 2019. It was $6,010 higher than in January 2020. The Average Price per Sq Foot for Sold Homes rose 6.5% from February 2019 to $148/sq ft. The Median List Price increased 4% to $260,00 compared to February 2019. The Average List Price per Sq Foot climbed 6.1% to $175/sq ft compared to February of last year.
Supply and Demand
The supply of single-family homes fell 23.1% from February 2020 to 2.07 months. That was 4.6% lower than in January 2020. The Absorption Rate*, which shows the rate that homes sell during a given time period, rose 31.5% from February 2019 to 0.41. That was 28.1% higher than in January 2020.
Currently, the Greater Tampa single-family housing market favors sellers.
*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%
More and more economists are predicting a recession is imminent as the result of the pullback in the economy caused by COVID-19. According to the National Bureau of Economic Research:
“A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”
Bill McBride, the founder of Calculated Risk, believes we are already in a recession:
“With the sudden economic stop, and with many states shutting down by closing down schools, bars and restaurants…my view is the US economy is now in a recession (started in March 2020), and GDP will decline sharply in Q2. The length of the recession will depend on the course of the pandemic.”
How deep will it go?
No one knows for sure. It depends on how long it takes to beat this virus. Goldman Sachs anticipates we will see a difficult first half of the year, but the economy will recover in the second half (see below):Goldman also projects we’ll have “further strong gains in early 2021.”
This aligns with the projection from Wells Fargo Investment Institute:
“Once the virus infection rate peaks, we expect a recovery to gain momentum into the final quarter of the year and especially into 2021.”
Again, no one knows for sure how long the pandemic will last. The hope is that it will resolve sometime over the next several months. Most agree that when it does, the economy will regain its strength quickly.
*Quarter 1 data from Goldman Sachs was updated from 0% to -0.2% on 3/17/20 after the initial release.
This virus is not only impacting the physical health of Americans, but also the financial health of the nation. The sooner we beat it, the sooner our lives will return to normal.
With all of the havoc being caused by COVID-19, many are concerned we may see a new wave of foreclosures. Restaurants, airlines, hotels, and many other industries are furloughing workers or dramatically cutting their hours. Without a job, many homeowners are wondering how they’ll be able to afford their mortgage payments.
In spite of this, there are actually many reasons we won’t see a surge in the number of foreclosures like we did during the housing crash over ten years ago. Here are just a few of those reasons:
The Government Learned its Lesson the Last Time
During the previous housing crash, the government was slow to recognize the challenges homeowners were having and waited too long to grant relief. Today, action is being taken swiftly. Just this week:
- The Federal Housing Administration indicated it is enacting an “immediate foreclosure and eviction moratorium for single family homeowners with FHA-insured mortgages” for the next 60 days.
- The Federal Housing Finance Agency announced it is directing Fannie Mae and Freddie Mac to suspend foreclosures and evictions for “at least 60 days.”
Homeowners Learned their Lesson the Last Time
When the housing market was going strong in the early 2000s, homeowners gained a tremendous amount of equity in their homes. Many began to tap into that equity. Some started to use their homes as ATM machines to purchase luxury items like cars, jet-skis, and lavish vacations. When prices dipped, many found themselves in a negative equity situation (where the mortgage was greater than the value of their homes). Some just walked away, leaving the banks with no other option but to foreclose on their properties.
Today, the home equity situation in America is vastly different. From 2005-2007, homeowners cashed out $824 billion worth of home equity by refinancing. In the last three years, they cashed out only $232 billion, less than one-third of that amount. That has led to:
- 37% of homes in America having no mortgage at all
- Of the remaining 63%, more than 1 in 4 having over 50% equity
Even if prices dip (and most experts are not predicting that they will), most homeowners will still have vast amounts of value in their homes and will not walk away from that money.
There Will Be Help Available to Individuals and Small Businesses
The government is aware of the financial pain this virus has caused and will continue to cause. Yesterday, the Associated Press reported:
“In a memorandum, Treasury proposed two $250 billion cash infusions to individuals: A first set of checks issued starting April 6, with a second wave in mid-May. The amounts would depend on income and family size.”
The plan also recommends $300 billion for small businesses.
These are not going to be easy times. However, the lessons learned from the last crisis have Americans better prepared to weather the financial storm. For those who can’t, help is on the way.
March 19, 2020
Mortgage rates rose again this week as lenders increased prices to help manage skyrocketing refinance demand. This is expected to be a short-term phenomenon as lenders work through their backlog. On the purchase front, daily loan purchase applications were rising as of mid-February but started to decline last Friday.
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!