72% Fewer Houses for Sale in Hillsborough County This Year
With mortgage rates so low it almost feels like free money and employers more amenable than ever to working from home, real estate is brisk business all over the nation—but nowhere so brisk as in Tampa.
In a prescient article, MarketWatch opined last year that “Cities in the Sunbelt could thrive in a remote-working world,” noting that some employers would likely let their staffs work from home indefinitely in a post-pandemic world. “That’s good news for less-populated cities with warmer climates,” the article continued, naming Tampa, Phoenix, Raleigh and Jacksonville as examples.
Fast forward to Spring 2021 and listings in the Tampa metro are down SEVENTY-TWO PERCENT from last year. And prices are up 15.2%. That may not sound like a lot until you do the math: On a $500k house, that’s $76k. These market conditions may make you wonder why anyone in their right mind would try to buy a house in Tampa.
Buyers have realized that a higher-priced house with a lower interest rate could actually cost less than a cheaper house with a higher interest rate.
In mid-2018, the average interest rate was 4.65%. If you had bought a house for $500k and put 10% down, your mortgage would be $450k. At 4.65%, your annual payments would be $27,844 and your total payments over 30 years would be $835,332.
If you bought that same house sometime in the last year, it would have cost more like $576k. With 10% down, your mortgage would be $518.4k. At 3% interest, your annual payments would be $26,227 and your total payments over 30 years would be $786,814. The house that cost $75k more in the short run actually cost $50k less in the long run.
So who might capitalize on these unusual market conditions?
BUYERS
Even if you paid considerably more for a house today than you would have 2-3 years ago, there’s still a solid chance it would actually cost less in the long run. A mere 1%-1.5% decrease in interest rate changes the game completely.
SELLERS
Is there anything less than ideal about your house? Busy street? Tiny bathrooms? Odd-sized lot? No parking? Noisy neighbors? You are virtually guaranteed to find buyers who are happy to look past these issues and eager to pay top dollar.
The mélange of circumstances that got us here—rock-bottom interest rates, pandemic-fueled demand, astonishingly low inventory—won’t last forever. “We expect to see more sellers emerge in the weeks ahead, which should give buyers more options” says realtor.com chief economist Danielle Hale. “Homes will likely continue to sell fast, but increasing interest rates could slow the pace.”
Thinking about selling? Now really is the time. Buyers are understandably in a hurry right now, looking to make their purchases before home prices or mortgage rates climb again.
Carrie Rowland is an Accredited Buyer’s Representative,® Certified Probate Real Estate Specialist,® Military Relocation Professional,® Graduate of the Realtor Institute® and a Realtor-Associate at RE/MAX Alliance Group in South Tampa
