July 2023 Real Estate Market Update forTampa Bay

The housing market in Florida continues to benefit from a record number of people migrating to the state.  Below are two statistics which speak to the unprecedented flow of people into Florida.

From July 2021-July 2022, nearly 444,500 people moved to Florida, which compared to the previous year was a gain of 185,000, the largest year-over-year impact of residents moving. Florida also ranked #1 in domestic migration, #2 in international migration, and #1 with the most people moving in per day at 1,218.Mar 29, 2023

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 drivers licenses were exchanged for Florida drivers’ 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.  In fact North Port (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 Covid 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% is 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 their home on the market knowing their payments will increase significantly even before they buy a more expensive home.  In areas where there are large tracts of undeveloped land, we are seeing 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 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.  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 major correction in sight.

So what does that mean for the home buyer or seller.  I would suggest that the next 12 months 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.