Tampa bay home prices in 2016 saw biggest gain in six years but will 2017 be as strong 10 gases and their uses


In 2016, Tampa Bay’s residential real estate market enjoyed a banner year. Single-family home prices in the four–county area soared nearly 14 percent compared to 2015. That was the biggest year-over-year gain in at least six years and the largest increase of any major metro area in the state, according to newly released figures from Florida Realtors.

The long-running and somewhat baffling shortage of homes for sale could begin to ease, holding down the rate of price increases. At the same time, rising interest rates will limit what some buyers can afford and keep others out of the market. And while certain areas might do as well or better than they did in 2016 — Largo, Westchase, Tarpon Springs — others, like South Tampa, are approaching what appraisers call "crazy," nearly unsustainable levels.

Nevertheless, Tampa Bay is still poised to be among the nation’s most robust housing markets in 2017. That’s the view of economist Brad Hunter, former Florida expert for the market intelligence firm Metrostudy, now chief economist for the online marketplace HomeAdvisor.

"The bay area has been extremely strong during this economic recovery,” Hunter said. "We’ve had very strong job growth — around 3 percent — and household formation rates also are increasing. What’s also been supportive of the Tampa Bay market is higher prices in the Northeast and Midwest. People have been able to sell their homes up there and move down here."

Last year, Paone listed a typical house in Largo, which has become a favorite of young families because of its affordable prices and relatively easy access to the Pinellas beaches. Updated, well-maintained and nicely landscaped, the house hit the market at $199,999. The price was so alluring that Papone had nearly 20 showings in the first 48 hours and took in eight offers.

At the end of last year, "starter homes” — which Trulia defines as those under $137,000 — accounted for 29 percent of searches but less than 17 percent of listings. "Trade-up” homes — $137,000 to $224,000 — made up 31 percent of searches yet less than 25 percent of listings.

Fewer homes for sale mean fewer homes get sold — while Tampa Bay prices rose almost 15 percent last year, the number of sales rose less than 5 percent. That’s a big problem for appraisers, who rely on recent sales of comparable properties to determine whether that house you just have to have is really worth what the seller is asking.

"Because of the lack of listings, people are listing for more than what is out there (on the market) to support the price," said Fran Oreto, chairperson of the Florida Real Estate Appraisal Board. "As an example, somebody might list a house for $200,000 and somebody might be willing to purchase it for $200,000 because there is nothing else available" to compare it with.

The tight inventory can lead to inflated prices, Oreto said, and also make it harder to get a government-insured loan in neighborhoods with few or no recent sales. Fannie Mae, the mortgage giant, wants appraisers to use comparable sales within 90 days.

"Fewer people are underwater on their mortgage and of course when you’re underwater you can’t very well sell because you owe more than the house is worth,” he said. "That’s a big part of the reason we’ve seen inventories quite low over the last six, seven, eight years. Now, more people can buy with ease because they can sell more easily and pay more for the home they buy.”

"I’ve been asked to work with a couple that is looking in the $2.2- to $2.7 million price range,” she said, "and there’s a lot on the market in that range compared to a year ago. I’m amazed at some of the prices they are getting. I’m hesitant to say ‘bubble’ but I don’t t see how at $600 a square foot for a home we can support that in the long term."

"The high-end cash buyer just buys, they don’t get an appraisal, they don’t care if they don’t make money, they just say, ‘I want to live here and let’s buy,’" Herndon said. "No one is offering data in support of these prices — most agents say the seller was asking $5 million and the buyer felt that was reasonable although there was very little data to support it."

For less affluent buyers, Herndon sees good value in Largo, in St. Petersburg’s Historic Kenwood ("It’s still pretty hip, a lot of young couple are moving in because they can’t afford the Old Northeast," she said) and in suburban areas like Tampa’s Westchase and Pasco’s Wiregrass that are close to the Suncoast Parkway.

In far northwest Pinellas, it has been shunned by buyers who dreaded dealing with U.S. 19. But since much of 19 was turned into a limited access highway, Tarpon with its sponge docks, lovely older homes and quaint downtown has become more attractive.

For buyers looking for new homes, rising rates could have a double-edged effect. They might push some buyers out of the market but also force builders to lower prices, especially in south Pasco and south Hillsborough where thousands of news homes are going up.

"I think it’s virtually impossible to have a bubble without exotic financing and we don’t have that anymore,” Hunter said. "What caused the bubble to happen is not just the lack of supply driving up prices fast, which is happening now, but enabling people to buy homes they really had no business buying because of the illusion created by the financial industry that they were able to afford the payments.”