Looking back at 2017, the report card on Florida’s housing market can be summed up in one word: sizzling.
And a definite A+.
Throughout the year, Florida experienced one of the nation’s strongest housing markets. And it only seemed to get stronger as the months went on. 2017 truly was the year when the housing market not only regained its strength, but took off soaring.
The turnaround may have surprised some Floridians who experienced the housing market collapse in 2008. That was followed by a rise in home foreclosures and a very slow, painful recovery. But talk of foreclosures, short sales and an absence of prospective buyers is long gone.
The story of Florida and Tampa Bay’s housing market is best illustrated by the months of July and August. These are typically two of the strongest months of the year for home sales. It’s a time when families want to purchase and get into their new home before the new school year begins.
Instead, this year sales fell in July and August – but it never set off alarm bells about a possible drop in interest among buyers. In fact, buying interest was at an all-time high. Sales dropped because there were simply not enough homes available on the market to meet buyer demand.
With a shortage of homes to sell, prices continued rising all year long. This was the rare example of prices rising while sales were falling. Welcome to the sizzling hot real estate market of 2017!
Why is the Sunshine State doing so well?
In a lot of ways, Tampa Bay has been a microcosm for what’s happening across Florida as a whole.
Across the state, home sales soared in 2017. The same was true in Tampa Bay.
A lot of that strong buyer interest has been generated by the state’s thriving economy. The national unemployment rate in October was 4.1 percent. That’s considered to be a very strong number. And it represents something close to full employment.
But Florida, and Tampa, did even better. Florida added 123,000 jobs in October and the unemployment rate fell to 3.6 percent in the same month. That’s down from 3.8 percent in September. This was the lowest rate since February 2007, before the national recession hit.
Tampa Bay’s unemployment rate was even lower, at 3.3 percent in October. That’s 1.4 percent lower than the previous year. The Tampa area added 27,000 new private-sector jobs in the past year. That was the second-highest number of jobs among all Florida metro areas.
The industries with the highest growth over the year in Tampa were professional and business services with 6,500 new jobs, and construction with 5,400. The Tampa area also remained first among the state metro areas when it comes to job demand. In October, there were 44,781 job openings in Tampa.
The creation of so many construction jobs partly reflects an increase in residential home construction. That’s designed to meet the high demand among people moving to the Tampa Bay area in search of job opportunities – and, obviously, homes. In the past year, 216,000 people entered Florida’s labor force, a growth of 2.2 percent. More and more Americans see opportunity in Florida, and specifically, in Tampa Bay.
How did the economy impact the housing market?
As the last quarter of 2017 began, it was clear that the Tampa housing market had been steadily improving since 2014.
First, 11 percent more homes sold in the 3Q of 2017 than in the third quarter of 2016, while the median price was up 15 percent from the 2014 quarterly figures.
Sales have been on the rise all year thanks to the strong economy, vibrant job market, and accelerating interest among prospective buyers. The biggest challenge in the market all year long has been inventory. A market balanced between the interests of both sellers and buyers is between five and six months of inventory.
In September 2016, there was a 4.7-month supply of homes available for sale. By this past September, it had fallen 30 percent. And there were now just 3.3 months’ worth of homes on the market.
Homes have been selling rapidly all year long. The average number of days a home stayed on the market dropped by 16 percent between September 2016 and this past September. Houses sold much faster than normal due to buyers competing with a smaller inventory of homes.
Where is the market headed in 2018?
The housing market is expected to continue performing at an above-average pace in 2018, according to the Urban Land Institute.
URL just issued its annual report, “Emerging Trends in Real Estate 2018.” It predicted that “We are in a long cycle, not in boom/bust. The key to the next few years is to expand horizons, market by market, property type by property type.”
ULI also noted that, “Fortunately, a sudden drop in altitude does not seem to be in the offing” because “demand is expanding real estate utilization rates across a process of generations … contributing to real estate’s forward momentum.”
The economy is also expected to remain strong in 2018, which is one of the major factors fueling the expectations that the housing market is not headed for a bust.
It turns out that 2017 was a terrific year for the housing market in Florida in general, and in the Tampa Bay area in particular. Home sales rose, buyer interest skyrocketed, and it was fueled in part by the state and local economy that kept churning out new jobs.
So if you’re reading this and planning to move to Tampa, or to Florida, here’s some helpful advice on your home search:
• Prices are likely to keep rising, so don’t postpone your home search in the hopes that the bottom will fall out of the housing market in 2018. Virtually no one is predicting that.
• Because of the strong economy, rental prices are rising as well, so it may actually be cheaper to own a home than rent one.
• Mortgage rates are at historic lows, so this is a great time to lock in a 30-year fixed mortgage with affordable monthly payments.
We procure home sites in Tampa Bay’s sought-after, established neighborhoods, and build new, move-in ready homes on those sites close to school districts, amenities, shopping, and downtown Tampa.
Contact Domain Homes today, and let us help you find your dream home.