It’s been a tough year for would-be homebuyers in the Tampa Bay region. Rising mortgage rates and steep asking prices have made the dream of buying a home unattainable for many.
Though the market has cooled considerably since 2021 – when historically low interest rates caused a flood of new sales – the slowdown hasn’t given buyers the big boost that some were hoping for.
Home sales in Tampa, St. Petersburg and Clearwater fell 9.1% year over year, according to August data from Greater Tampa Realtors. Homes are also sitting on the market for longer, with the median time to sale increasing by 17.6%.
Lei Wedge, a professor of finance at the University of South Florida Muma College of Business said that’s not surprising given that increasing mortgage rates have pushed some buyers away.
”We were assuming that high interest rates would cause lower home prices but that hasn’t happened,” she said.
Instead, the median sale price in the Tampa metro area increased 4% since last year.
So what’s causing prices to stick? Manuela Hendrickson, broker and owner of Global LifeStyle LLC in Pinellas County said there’s still not enough homes on the market for everyone who wants one.
The number of active listings dropped by 17.4% since last year. There’s about a 2-month supply of available inventory.
In order for things to shift back toward a buyer’s market Hendrickson said we would need 6 or more months supply.
She noted that many potential sellers are dissuaded from listing their homes right now because they’re already locked in at a lower mortgage rate — some as low as 2% if they bought during the peak of the pandemic. Current rates hover at around 7%, according to weekly data from Freddie Mac.
The good news? Wedge said she believes prices may have finally reached their peak. The bad news is that even if prices come down slightly, they’ll likely never return to pre-pandemic levels.
Kristine Smale, a senior vice president for the real estate analytics from Zonda said it’s difficult to predict when mortgage rates will fall, but that buyers will likely face headwinds through the rest of the year.
For those who need to move now, looking at new construction homes may be a good way to find a deal.
“Builders are reporting slower demand than expected,” Smale said. “They really don’t want to see those homes sit so they’re having to offer more incentives.”
Some builders will cover your closing costs or even offer mortgage buy-downs, meaning they’ll supplement the cost of your loan to give you a reduced rate for the first couple of years.