South Tampa Real Estate Market Forecast 2023

South Tampa Real Estate Market Forecast 2023

Heading into 2023, the South Tampa real estate market is experiencing continuing upward price trends year-over-year, even as closed sales decline. Interest rates skyrocketed in 2022, putting pressure on a market with record-high home prices. And as 2022 ended, Greater Tampa saw a 153% increase in year-over-year inventory, with over 600 listings in South Tampa. A trusted REALTOR®  like me, Dan Kempka, can contextualize data to make your foray into South Tampa real estate meaningful and profitable.

At the same time, South Tampa real estate transaction total dollar volume for single-family homes fell slightly more than 9% from approximately $1.8 billion to roughly $1.7 billion year-over-year as of October. In comparison, 2021 saw a more than 10% year-over-year increase in total dollar volume at the same time of year. The recent bump in median sales price indicates added stability as we move forward into a time of relative uncertainty. National, state, and local indicators show residential real estate sale prices leveling off.

Interest rates and recession fears hit the national housing market

Rising interest rates have helped to throw cold water on the red-hot residential real estate market, encouraging those who secured lower rates in recent years to stay put and discouraging some buyers from considering new purchases. At the same time, inflation, recession fear, and other economic uncertainties — not the least of which is uncertainty over future home values — encourage many potential buyers to take a more conservative tack.

While some experts believe that interest rates are likely to come back down by the end of 2023, it appears likely that 15-year and 30-year mortgage rates have yet to peak. As such, home sales are expected to continue to decline across the country entering 2023. However, with many homeowners hesitant to venture out of their current housing situation and recession and supply chain issues hindering new home building, limited housing supply will likely balance out reduced demand and prevent home prices from falling significantly (if at all). Some regions, like South Tampa, could even see home prices rise, though more conservatively.

Hillsborough County housing supply rebounds

Across the state, the housing supply grew from 1.4 months in May to 2.7 months in October 2022. Hillsborough County, which encompasses South Tampa, has seen a similar story. By January 2023, inventory in Hillsborough County had grown about 44% year-over-year. However, with an estimated 3.1 months of availability, Hillsborough County falls well short of six months of supply, the benchmark for a balanced housing market.

Pandemic-linked demand for housing remains high, partly due to new residents moving into the state, even as higher interest rates have caused the real estate market to cool. This increased demand and the same limiting factors on housing inventory nationwide will likely prevent sale prices from dropping significantly going into 2023.

New housing is slow to materialize

New housing wait times across Florida are up to 15 months from initial contract to close, approximately double the usual wait time, as supply chain problems have yet to be alleviated. Construction delays pressure the housing supply and drive many who would have otherwise sought a new-built home to opt for recently-built homes.

Considering all these factors, a 2008-style Florida real estate market crash is highly unlikely. The South Tampa real estate market could be bucking some trends related to housing supply.

Cash sales decline in Tampa

In January 2023, the year-over-year median time to sale for homes in Hillsborough County was up to 77 from 55, while the median time to contract rose almost from 21 days to 40 days. The greater increase in median time to sale indicates more buyers are seeking financing for their home purchases than a year ago.

The area saw an almost 36% drop year-over-year in cash sales in October, though cash sales were up slightly from a September loss that was the lowest the local market has seen since May 2020. Cash sales accounted for only a little less than 27% of all single-family home sales in October, an 18% drop year-over-year and a level not seen since February 2021.

Tampa's single-family housing supply could be mixed

Single-family housing supply in the South Tampa real estate market has seen steady growth throughout most of 2022 and increased by just under 117% year-over-year in October, reaching two months' supply — a level not seen since early 2020. The housing supply declined steadily beginning in 2020 (with a short plateau in mid-2021) but followed statewide trends, with inventory starting to increase in April of this year.

At the same time, new listings were down almost 21% year-over-year in October and just over 21% in September — the first time in 2022 that new listings declined by double-digit percentages. This could indicate that the housing supply has yet to stabilize and could drop off going into the new year; however, this does not necessarily mean that supply will decline significantly.

Coming to terms with the new normal

Despite home prices leveling out, listing prices at the end of 2022 are overshooting the final sale price on many homes. Most of 2022 had seen the median percentage hold steady year-over-year or grow, with August as the first month it fell below 100%.

This is likely the result of many sellers still seeking sale prices in line with mid-2022 highs as homeowners adjust expectations to the stabilizing market. While owners of South Tampa real estate should be able to anticipate property values increasing steadily during 2023, they should not expect the kinds of increases seen in the last two years.

Making the most of South Tampa real estate

The South Tampa real estate market has had a wild ride recently. Even as it slows down and finds equilibrium, demand should remain healthy. If you’re a buyer or seller who wants the most out of homeownership in South Tampa, work with me, Dan Kempka. I’m a born problem-solver with a keen eye for detail, especially appraisals. Reach out today and see how I can expedite your home purchase or sale.

*Header photo courtesy of Unsplash

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