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- Mar 10, 2014
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Tampa had a good start to 2014 with average sale price of a single family home up 9.5% from the previous year. While January is always a slow sales month, both closed sales and pending sales were up marginally 1.2% and 0.1% from the year before. Cash sales are down 9.7% but still account for a substantial share of the market. Inventories are rising with more new listings also coming on stream but remain under 5 months currently. Days on market rose a corresponding 7.7%. (Source: Florida Realtors).
/raduploads/images/NewFolder/Jan%2014stat.png
The breakdown by type of sale is revealing. Traditional sales were up 12.2% with the median sales price rising 7.6% on the year. While there were 16.3% more foreclosure sales the median sale price was flat (down by 0.6%) reflecting the reduced investor demand. There were 47% fewer closed short sales as lenders required 8.9% more for them at the closing table.
Investors buy different properties than normal buyers and the waning demand seems to have impacted the price of foreclosures more than regular sales. The amount of new sales activity also supports this argument as Tampa rose to be the 16th most active new construction market in 2013 after a long period of inactivity (Source: Forbes).
/raduploads/images/NewFolder/Jan%2014stat2.png
(Source: Florida Realtors)
Claims of diminished investor demand require some perspective.
Cash sales still accounted for 50% of all closed sales in January and 33% of all new pending sales. The amount of investor demand is down from a frenzied pace but is still very high.
The reduced demand is a good thing to a certain extent as investors have a better chance of actually buying a good deal. The discount available on foreclosures has improved in the last year as evidenced by the fact that the regular sale price has gone up and the foreclosed price has gone down marginally over the same time. In late 2012- early 2013 the investor market became so competitive that foreclosed properties would attract bidding wars, in some cases selling at prices exceeding the price of regular `non-foreclosed` sales.
What attracts the investors is generally cash flow and single family homes still net out well above prevailing interest rates so as to produce significant leverage on borrowed funds or simply to produce a return on capital.
Demand for housing turns on economic activity. The employment numbers for January have yet to be released but in December 2013 the unemployment rate fell to 5.9%, the lowest recorded since May 2008. Actual employment at 1,259,105 the highest December ever recorded.
/raduploads/images/NewFolder/janEmp.png
(Source: Bureau of Labour Statistics)
Affordability
Another factor to consider is affordability. Tampa was one of the hardest hit markets during the crisis and prices are still well below peak. As of mid 2013 73% of homes in Tampa are within reach of the average middle class Tampa family (Source: Trulia) When compared to cities with comparable affordability Tampa is a great place to live. Akron has comparable affordability for example but not many people vacation there.
Looking at it another way the average (single family) home costs $ 183,000 or a little more than 3 times the average family income of 57,000.
As noted by Trulia, that seems a common theme in U.S. markets as prices have rebounded: Those that were wiped out are still affordable while in others the prices were flat or kept rising such that affordability is strained.
Allistair Trent, Sales Representative, RE/MAX Condos Plus Corp. Brokerage
Real Estate Investor and Asset Manager, RealEquity Corporation Tampa www.investrent.ca
Licensed to provide legal services in Ontario
O: 416-203-6636, Direct: 416-628-4835, Tampa 813-600-5036
/raduploads/images/NewFolder/Jan%2014stat.png
The breakdown by type of sale is revealing. Traditional sales were up 12.2% with the median sales price rising 7.6% on the year. While there were 16.3% more foreclosure sales the median sale price was flat (down by 0.6%) reflecting the reduced investor demand. There were 47% fewer closed short sales as lenders required 8.9% more for them at the closing table.
Investors buy different properties than normal buyers and the waning demand seems to have impacted the price of foreclosures more than regular sales. The amount of new sales activity also supports this argument as Tampa rose to be the 16th most active new construction market in 2013 after a long period of inactivity (Source: Forbes).
/raduploads/images/NewFolder/Jan%2014stat2.png
(Source: Florida Realtors)
Claims of diminished investor demand require some perspective.
Cash sales still accounted for 50% of all closed sales in January and 33% of all new pending sales. The amount of investor demand is down from a frenzied pace but is still very high.
The reduced demand is a good thing to a certain extent as investors have a better chance of actually buying a good deal. The discount available on foreclosures has improved in the last year as evidenced by the fact that the regular sale price has gone up and the foreclosed price has gone down marginally over the same time. In late 2012- early 2013 the investor market became so competitive that foreclosed properties would attract bidding wars, in some cases selling at prices exceeding the price of regular `non-foreclosed` sales.
What attracts the investors is generally cash flow and single family homes still net out well above prevailing interest rates so as to produce significant leverage on borrowed funds or simply to produce a return on capital.
Demand for housing turns on economic activity. The employment numbers for January have yet to be released but in December 2013 the unemployment rate fell to 5.9%, the lowest recorded since May 2008. Actual employment at 1,259,105 the highest December ever recorded.
/raduploads/images/NewFolder/janEmp.png
(Source: Bureau of Labour Statistics)
Affordability
Another factor to consider is affordability. Tampa was one of the hardest hit markets during the crisis and prices are still well below peak. As of mid 2013 73% of homes in Tampa are within reach of the average middle class Tampa family (Source: Trulia) When compared to cities with comparable affordability Tampa is a great place to live. Akron has comparable affordability for example but not many people vacation there.
Looking at it another way the average (single family) home costs $ 183,000 or a little more than 3 times the average family income of 57,000.
As noted by Trulia, that seems a common theme in U.S. markets as prices have rebounded: Those that were wiped out are still affordable while in others the prices were flat or kept rising such that affordability is strained.
Allistair Trent, Sales Representative, RE/MAX Condos Plus Corp. Brokerage
Real Estate Investor and Asset Manager, RealEquity Corporation Tampa www.investrent.ca
Licensed to provide legal services in Ontario
O: 416-203-6636, Direct: 416-628-4835, Tampa 813-600-5036