More and more people are building home equity in Tampa. Here’s why.
As the housing market has gotten stronger and home prices have soared, it’s been a frustrating time for prospective home buyers searching for their dream home. The inventory of homes for sale has been low for the past few years.
But a new report by listing site Zillow may give them the motivation to keep their search going. Zillow has noted that today, people are building equity in their homes — and quickly. Those buyers who found and purchased a home in the past few years are getting a solid return on their investment. As Zillow noted, they are building equity as home values and prices remain on an upward trajectory.
The rise in home values is not limited to luxury properties. In fact, Zillow reported that starter homes are leading the way, rising in value fastest compared to luxury homes.
While the sellers of luxury homes may secure a higher price, Zillow noted that because there has been a long-term shortage of affordable houses and starter homes on the market, so the value of those properties is rising quickly.
Zillow’s Senior Economist Aaron Terrazas noted that this study helps to underscore the power of homeownership as a tool for building wealth, including among the middle class.
And since the housing market in Florida, and in the Tampa Bay area, got off to a strong start in January, it’s clear that buyers have a strong motivation to continue an active home search right now, particularly if they plan to stay in their new home for a while.
Why are home values rising?
For the past year, the housing market has been viewed as very strong – even when, as was the case last summer, sales were declining.
That’s because falling sales didn’t reflect a diminishing interest among buyers. In fact, the exact opposite was the case. Buyers were out in force all summer.
But what was diminishing was inventory. All throughout 2017, the lack of homes available on the market has been a frustration for home buyers and a steady challenge for them. But that trend continued to push housing prices up and up, as the homes on the market become far more desirable.
Now Zillow’s study has helped to reinforce why so many buyers are still actively looking in this competitive market.
For their analysis, Zillow divided the housing market into equal thirds based on price ranges. Their study revealed that owners of starter homes in the bottom tier had gained 44.4 percent in equity value over the past five years. That was a much higher pace than for people who own homes in the top third of the marketing, or the luxury end, where values have risen 27 percent.
Clearly, the demand for homes has pushed up values. That’s helping buyers in the lower and middle end of the market to build equity – quickly.
This has been a key aspect of the story of the housing boom. Those who own a home not considered a luxury property are finding their value soaring.
A reversed course in the housing market
As Zillow noted, this recent trend is the reverse of what happened when the housing market crashed in 2008, and owners of properties in the starter home or affordable categories were particularly hard hit and saw their values take a sharp tumble. In fact, their homes lost a lot more value than properties in the luxury end of the market.
But as the market has recovered, and demand for entry-level homes has soared, and so have values. This has been a strong reminder that among middle class families, a home can become their biggest financial asset.
Their home also represents a significant share of net worth for many homeowners. That’s why demand has been so high.
The Tampa Bay area is a good example of this. The city has experienced a very strong economy in recent years, where the unemployment rate has fallen to 3.6 percent – below both the state and national average. That vibrant job growth has attracted more and more families moving here looking for job opportunities. When they find a position, their next step is to search for a home.
And homes in Tampa have definitely been rising in value all year. As Zillow noted, among the largest U.S. housing markets, owners of homes in Tampa are seeing the greatest gains in home equity. Entry-level homeowners have gained the most equity in the past year in Tampa, up 20.4 percent. Tampa even beat out Las Vegas, where entry-level homes have appreciated 19.9 percent from last year.
It’s helped that homes in Tampa have been considerably more affordable than in other cities like San Francisco and New York, where prices have soared so fast that home buying has been out of reach for many.
That hasn’t been the case in Tampa, which is another reason why families are looking to relocate here.
In fact, Zillow noted that the markets that have appreciated the most in the starter tier have included Miami-Fort Lauderdale (up by 102.2 percent) and Tampa, where values are up by 95.2 percent.
Knowing that appreciation is good for homeowners, buyers seem likely to remain focused on their search for a home in the Tampa Bay area.
Building Home Equity in Tampa
Because of the shortage of existing homes on the market, a good strategy for prospective home buyers is to reach out directly to a proven builder like Domain Homes, your Urban Neighborhood new home builder.
Domain Homes procures sites in Tampa Bay’s most highly desirable and sought-after neighborhoods. That includes established neighborhoods like South Tampa, West Tampa, North Hyde Park, the Heights, and St. Petersburg. These are popular locations close to top-rated school districts, shopping, and the entertainment and nightlife in downtown.
Domain Homes purchases older, dilapidated homes that are often badly in need of repair and replaces them with move-in-ready new homes. Domain Homes believes that buyers shouldn’t have to settle for a “used” home once they’ve discovered how beautiful Tampa’s top neighborhoods are.
And right now, Domain Homes is building new homes in these neighborhoods, which could include your dream home in an ideal location, and available at a great value. And it could also be the home that you and your family start to build equity in – and quickly.