Tampa, FL

Beware of Tampa's White Hot Real Estate Boom

Sean Kernan


Editorial Rights purchased from PC Photography via iStock Photos

I recently began looking for a house here in Tampa, where I've lived for 13 years. It quickly became apparent that I was in for a ride.

I'm here in South Tampa, one of the most in-demand areas for buying. I'd set up notifications for the area on Realtor.com. I watched in shock as house after the house went up for sale, and was sold within a couple of days. Those homes that didn't sell, seemed to go up in price. It made no sense. Within 48 hours of making an offer on my new home, all three of the other homes on my list were in pending status. It was clear that, in order to get a home, you'd best make an offer from the living room you are taking a tour of.

Is this a bubble that will result in a surge of foreclosures? Not likely. According to a new analysis from real estate data firm Black Knight, the national mortgage delinquency rate has seen steady improvements since the onset of the pandemic.

“The hallmark of the bubble is speculative behavior, where the expectation of future price growth is driving the current price growth,” Kiefer said. “That’s definitely not what’s happening now ... it’s that people need housing.” But what is making it so difficult? There are huge demand and low supply. The pent-up demand from the 2020 lockdowns, combined with a new influx of people looking to live in Tampa.

Even further, large corporations are buying up local homes and turning them into rentals. They are hunting homes that aren't older than 20-30 years old, that have good schools nearby. These institutions can make cash offers against the family home buyers. This competition drives the prices up, and there are entire neighborhoods that are rental-only houses. One company owns more than 8,000 rental homes in Tampa.

But even still? Is it worth buying?

In my own case, I probably paid $20K-$50K more than I would have paid a couple of years ago. I wasn't thrilled about it, but, like so many others, I was given a competitive cash offer for my home. So many people have said, "It's a great time to sell! Good for you!" They forget that this advantage nets itself out when you are also buying in the local area.

The next massive factor is a lumber shortage. The price of lumber in many markets is now up 300%. The rapid demand for construction is causing huge strains on supply chains. Additionally, there are labor shortages to keep up with residential construction demands, and teams are struggling to meet deadlines. Residents are jumping to buy properties they would have never bought under ordinary conditions. Compound this with the fact that major real estate players are entering the market, building Water Street Tampa, Tampa Edition, and more.

“We’re getting big city folk from Chicago and New York City who like the fact Tampa is not overcrowded,” said Dominic Pickering, sales director at BTI. “The Tampa Bay region is much smaller than South Florida. There is less traffic, much more open spaces, and a lot of beachfront you can still have access to.”

Another function of this huge influx of demand for homes is a mass exodus from the northeast. The new work-from-home policies have made it possible for northerners to travel south, and work in warmer climates. Additionally, Florida has more favorable tax laws relative to many states in that region, as well as loosened covid restrictions.

Tampa's population is projected to grow at 3.3% annually over the next several years, and more than 25% over the next 25. More than 126,000 people are moving to metropolitan areas by 2024. You can't beat good weather and access to a beach. When people complain about the heat in Florida, they forget that Tampa has never been above 100 °F in its recorded history.

Does this justify paying a 20-30% premium on the price of a house? That's hard to say. It's clear that many buyers are paying exorbitant prices on homes that, candidly, are in junk condition. But if you need a home in Tampa, waiting probably isn't a good idea. Prices will continue to rise in the coming years. Happy hunting.

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