Tampa Bay homes prices rise as area remains stuck in vicious cycle

This four-bedroom, three-bath overlooking the Gulf of Mexico in New Port Richey sold in June for $1.06 million, the most paid for any home in Pasco County that month. [Courtesy of Perrella Virtual Tours]
This four-bedroom, three-bath overlooking the Gulf of Mexico in New Port Richey sold in June for $1.06 million, the most paid for any home in Pasco County that month. [Courtesy of Perrella Virtual Tours]
Published July 23 2018
Updated July 23 2018

Halfway through the year, Tampa Bay’s real estate market remains stuck on the same sad song: too many buyers for too few houses.

Sales of single-family homes in Pinellas County plunged more than 12 percent in June compared to the same month a year ago and were essentially flat in Hillsborough, Pasco and Hernando counties. That served to push prices up more than 6 percent in all four counties, Florida Realtors reported Monday.

"We’re not seeing sales growth happen and that has to do with the fact there are not enough homes for sale so prices are rising rapidly and causing buyers to hold back," Danielle Hale, chief economist for realtor.com, said in an interview with the Tampa Bay Times.

In Pasco, prices shot up 9.4 percent to a median of $222,000. That was followed by Pinellas, up 7.2 percent to $266,375; Hernando, up 6.9 percent to $169,000; and Hillsborough, up 6.5 percent to $261,000.

RELATED COVERAGE: Here’s what middle-of-the-pack prices can get you in a Tampa Bay house now

Nationally as well as locally, the scant supply of available homes is largely due to a vicious cycle, Hale says. There are so few homes on the market because people who otherwise might sell are afraid they won’t be able to find a new place to live because there are so few homes on the market.

"New construction is the solution," Hale said, "but new construction has lagged behind. There were some years of under-building (after the housing crash) and some under-building is good but we have drastically under-built."

In the Tampa Bay area, permits for new homes averaged 1,500 to 1,800 a month in 2003, near the peak of the last boom. In May, the most recent month for which figures are available, 1,400 permits were issued.

Due to the strong economy, the number of housing starts should start to climb although tariffs on lumber have added an estimated $9,000 to the cost of a new home.

"That just raises the bar that buyers have to hurdle," Hale said, "and makes it difficult for builders to build something buyers can afford."

MORE: Go here for more Business News

Tampa Bay’s top sale in June was $7.2 million for an eight-bedroom, eight-bath house overlooking the Gulf of Mexico in Redington Beach in Pinellas. In Hillsborough, a five-bedroom, seven-bath bayfront home in Tampa’s Davis Islands sold for $6.2 million.

In Pasco’s priciest transaction of the month, a couple paid $1.06 million for a gulf-front house in New Port Richey.

"They lived in the neighborhood and the wife had been in love with the house for 30 years," said the seller, Patty Deremer, who also was the listing agent.

Statewide, sales of single-family homes were down 1.3 percent compared to June a year ago. Meanwhile, the median sales rose price 6.1 percent to $260,000, according to Florida Realtors.

Nationally, sales of existing homes — condos and townhomes as well as houses — declined for the third straight month in June and showed a year-over-year drop of 2.2 percent. The continuing imbalance between supply and demand helped push June’s median sales price to a new all-time high of $276,900.

The root cause of the imbalance "is without a doubt the severe housing shortage that is not releasing its grip on the nation’s housing market," Lawrence Yun, chief economist of the National Association of Realtors, said. "What is for sale in most areas is going under contract very fast and in many cases, has multiple offers. This dynamic is keeping home price growth elevated, pricing out would-be buyers and ultimately slowing sales."

Contact Susan Taylor Martin at smartin@tampabay.com or (727) 893-8642. Follow @susanskate

Advertisement