Tampa’s average sale price has exceeded the previous market peak reached back in 2006. Several years of double digit price gains are now giving way to a more normal rate of appreciation—and many parts of the nation are experiencing signs of a slowdown. What does that mean for our local market?
National media including CNBC, Bloomberg, The Wall Street Journal, and MSN are reporting lower sales and higher inventory in some of the nation’s hottest markets. According to Bloomberg Businessweek, the U.S. housing market -- particularly in high demand areas like Seattle, Silicon Valley and Austin, Texas -- appears to be headed for the broadest slowdown in years. Buyers are getting squeezed by rising mortgage rates and by prices climbing about twice as fast as incomes, and there’s only so far they can stretch. Southern California, long considered a predictor for the rest of the country, is experiencing this slowdown in a dramatic fashion.
So that’s the national news, yet we all know real estate markets are highly local—so what about the Tampa Bay area?
Tampa’s relatively young demographics, great weather, employment opportunities, housing affordability, low taxes, and vibrant urban and suburban lifestyles still make this market extremely attractive to buyers of all ages. That being said, when we study the numbers, even our market is starting to experience signs of a plateau, and we believe an eventual correction. After 8 consecutive years of an appreciating real estate market, both home sellers and builders are clearly experiencing that buyers’ budgets are not limitless. Optimistic list prices that seemed attainable just months ago simply aren’t materializing. Click here to see sales trend statistics between January and June of this year from the Greater Tampa Association of Realtors®.
Sellers who have been watching the FOR SALE signs go up and down quickly in months past, expecting to sell quickly for more than their neighbor’s home (just because the market is hot) are finding the market has not been able to keep pace with their expectations. Sellers competing with new construction are finding that the builders are lowering prices, and offering incentives to buyers and agents. So while the news keeps telling us about low inventory and high demand, it simply doesn’t feel that way if you are selling a home in an area where new construction is among the competition.
Recall that our Tampa market peaked back in 2006, then experienced the meltdown in 2008 (that really started back in 2006). Our market lost about 45% of its value by 2011. No one would have predicted or believed what was ahead of us back then. Back in 2005, while the prices and sales figures were still rising, John was studying the inventory, and counseling our sellers to get ahead of the market. Even as the prices of the closed sales continued to rise, it was clear that inventory was growing and new pending sales were decreasing. Many of the closed sales recorded each month back in 2006 were the result of new construction sales that had gone under contract 6 to 12 months prior.
While the media was still exuberant about the market continuing to climb in 2006, we were advising sellers to price their homes competitively rather than overpricing and hoping for the market to meet their expectations. Smart sellers in 2006 and 2007 priced their homes aggressively and sold in 2007 and 2008, while those unwilling to listen remained in denial at list prices that were simply unattainable—which in hindsight turned out to be a very expensive mistake. Many of those homes never sold, or sold years later for much less. In hindsight, we now know it would take as long as 10 years to see those same prices from 2006-2007 again.
A vast pool of our current real estate agents selling real estate today have been licensed for less than 10 years, and have never sold homes in a flat or down market, thus are simply not equipped to detect the signs of a market correction, nor strategically position their clients for success. As agents who have weathered multiple market cycles over the past 30 years, we’ve learned the telltale signs of market shifts, and the marketing strategies make our clients successful both selling and buying.
If you are a seller, be assured that the market is still strong, yet a home sale may take longer than you had originally hoped. Savvy sellers will pay close attention to the market conditions, and make sure their home is strategically positioned both in condition and price. While no one has a crystal ball, sellers who wait to sell today may not be able to count on a higher sale price simply by waiting. Depending on your home’s age, your neighborhood inventory, and overall buyer demand, your home may not sell for more in a year or two, so if you are looking to lock in a gain, waiting might not be a wise strategy.
If you have questions about your own real estate situation or the value of your home, give us a call here at the office (813) 907-2555 or email us at firstname.lastname@example.org. We’re always available to assist you in taking advantage of the real estate opportunities in every market.