TAMPA, Fla. (WFLA) — What goes up must come down.
While home values in Tampa rose 31.4% in February, Zillow reports the inventory of available homes dropped 29.5%, putting the price crunch into an even harsher market setting. Sellers with homes available continue to reap the benefits of mass migrations to Florida and inflated prices.
Tampa’s inventory issues have consistently topped most of the country, but the latest Zillow inventory report showed Miami’s inventory had gone down 61% compared to Tampa’s near-30% home deficit.
At the same time prices to buy a house rose to $342,000 on average, price per month to rent was measured by Zillow at $1,999 per month. In terms of price increases, that’s an extra 28.1% compared to last year.
According to Zillow, the housing shortage and higher rent prices are both due to demands created by COVID-19, adding onto issues that were already in motion before the coronavirus swept the world.
“The pandemic brought with it extreme demand for homes that has pushed prices to rise at previously unimaginable rates,” Zillow said. “Extreme demand driven by historically low interest rates and a wave of Millennial and Baby Boomer buyers depleted a housing stock that was never really replenished by new construction after the glut following the Great Recession.”
The real estate company study reports that price increases are only going to go up, as annual home value growth continues to accelerate through the spring. They expect prices to peak at 22% higher levels in May, before starting to “gradually” slow through early next year.
While prices are on the rise for homes and rent, Zillow is expecting sales to close fast as demand stays high. They found that “extremely strong demand from home buyers” made home purchases go fast, selling in 11 days compared to the 17 in 2021. Homes sold in about a month in February 2020, making the 2022 speed 25 days faster as the inventory crunch continues.
Month-to-month, Zillow said homes across the U.S. could see prices rise about 2% through May 2022. They said the “typical U.S. home is expected to be worth almost $400,000” by February 2023. The biggest issue is likely time, when it comes to solutions to the ongoing housing inventory problem.
“It’s going to take some time for inventory to rise enough to help curb runaway price growth, even as builders are working feverishly to get new construction on the market,” Zillow said. “Rapidly rising mortgage rates that may make a new mortgage considerably more expensive than their current payment may also discourage some homeowners from selling.”
Right now, the typical U.S. home is worth about $331,500, compared to Tampa’s $342,000. In other Florida metro areas, homes are already higher than the estimated national average for next year.
Sarasota homes are valued at $432,300 on average, a 39.3% price jump, while inventory in the same area was down 46.2% in February. In Lakeland, inventory dropped 24.5% and homes were priced at $282,400 on average. Rent in Sarasota averaged $2,380 and $1,775 in Lakeland.
Compared to pre-pandemic, the national inventory is 48% lower, according to Zillow, “breaking with past yearly trends” while homes on average were valued 32.4% higher. Compared to February 2020, rent was $3,400 more per year in February 2022. Meanwhile, mortgage interest rates are now reported at 4.16% for a 30-year fixed rate, after the Federal Reserve increased interest rates for the first time since 2018.