TAMPA, Fla. (WFLA) — Four cities in Florida show that if you’re moving here from out of state or out of town, you’ll pay more for your house than the locals. Real estate company Redfin surveyed the costs of buying a house in 49 cities across the U.S.
For the biggest cities, the buyers already there spent a lot less on their new homes than their migrating neighbors, sometimes close to 30% less. Price differences reported by Redfin were based on average maximum budgets for those moving to their new towns and locals, along with median sale prices as of December.
Of the 49 cities surveyed by Redfin, only seven had prices that were lower for those moving in. The city with the lowest price difference between out-of-towners and locals was Fremont, Calif., where those moving from outside spent 6.1% less than those already living in the city.
The Redfin study said “relocators have more to spend on homes than locals in 42 of the 49 cities included in this analysis.” The company said the buyer prices are less of a concern for those moving to areas like Nashville from the West Coast, such as in California.
“People moving from the West Coast will pay way over asking price without batting an eye. In their eyes, they’re getting a deal. It’s really hard for locals to compete right now, and it can be devastating for first-time buyers who aren’t able to offset high prices by selling a home before they buy a new one,” according to a Redfin agent in Nashville.
The city with the biggest gap was Nashville, Tenn., where locals paid 28.5% less for their new homes than those moving from out of town or out of state. Philadelphia, N.J. wasn’t far behind at 28.4% higher prices for newcomers. New York City and Atlanta also trailed closely, but Miami hit the ranks at No. 5.
For the four Florida cities that made the list, price differences got as high as 25.1% in Miami and as low as 1.7% in Jacksonville. Orlando and Tampa were middle of the pack, but still a gap between at 17.1% higher prices for out of towners in O-Town and 9.2% higher for out-of-town movers in Tampa. While the maximum budget gaps were bigger in places like Miami, the actual budget dollars were high for both groups in Tampa, where the difference in price was lower.
For Tampa homebuyers, local or from outside, the median sale price for a house as $339,000 according to Redfin but the budgets were more than $100,000 higher. Out-of-town buyers reportedly budgeted about $575,400 while locals budgeted about $527,000.
As of Feb. 10, mortgage interest rates are rising ahead of an expected rate hike from the Federal Reserve in March. At this time, 15-year fixed rate mortgages are approaching 3%, while 30 year fixed rate mortgages are almost at 3.7%, according to Freddie Mac, one of two federally-backed mortgage companies.
The pricing and interest rates could have an effect on the number of people willing or able to buy homes, in addition to continuing inventory problems across the U.S. In Florida markets, Realtor.com reports increases in the number of sales as price growth continues for most locations.
|Metro Area||2022 Y/Y Sales Growth||2022 Y/Y Price Growth|
|Cape Coral-Fort Myers, Fla.||-5.6%||2.7%|
|Deltona-Daytona Beach-Ormond Beach, Fla.||0.6%||6.1%|
|Lakeland-Winter Haven, Fla.||6.5%||7%|
|Miami-Fort Lauderdale-West Palm Beach, Fla.||3.6%||5.8%|
|North Port-Sarasota-Bradenton, Fla.||0.8%||1.7%|
|Palm Bay-Melbourne-Titusville, Fla.||7.4%||7.9%|
|Tampa-St. Petersburg-Clearwater, Fla.||9.6%||6.8%|
With the exceptions of the Tampa and Orlando markets, every area in Florida is having price growth outpace sales increases. Questions of affordability and location for construction to address pressing housing needs continues in the legislature, and the City of St. Petersburg released study results for the housing needs of their residents.
The march of inflation, including housing costs growing higher than the rest of the country, puts Tampa Bay’s housing and migration viability at the top of affordability concerns. The metro area’s inflation rate was more than two points over the national in the latest data from the Bureau of Labor Statistics. Increases to rent and mortgages was more than double the rest of the country, compared to the year before.
The cost issue is exacerbated by the cost of materials to build increasing as a result of inflation, as well. The latest Producer Price Index reported softwood lumber prices had gone up 25.4% from December to January, a 20% increase compared to the year before. While hardwood lumber didn’t increase as much month-to-month, prices for hardwood were up 31% over the past year.
More significantly, fabricated structural metal, used for building homes and offices, had a 42.5% price increase from January 2021 to January 2022. Air conditioning and refrigeration equipment was up 18.7% in the same period of time, while ferrous wire products, used for building bridges and skyscrapers, had a nearly 30% increase in price.
All of which is to say, building is getting more expensive. Whether it’s homes, offices, bridges or roads, material costs are going up. While efforts by federal and state governments to invest in infrastructure developments are needed, and some say the size of the investment is historic, as material costs go up, the impact of those dollars is reduced by the reduced purchasing power.
Concerns over inflation’s effects on building also come from the Associated General Contractors of America, a builders’ association. In a new report, the organization said materials prices collectively rose 20% over the past year, adding to issues centered on addressing inventory shortages for construction and buyers.
“Spiking materials prices are making it challenging for most firms to profit from any increases in demand for new construction projects,” said Stephen E. Sandherr, the association’s chief executive officer. “Left unabated, these price increases will undermine the economic case for many development projects and limit the positive impacts of the new infrastructure bill.”
The AGCA said the gap between prices for builders and prices for consumers would expand as they pass the costs onto their customers to remain profitable.
The group’s latest Construction Inflation Alert, a report produced to track price changes and their effects on the industry, said the combination of supply chain delays and “fast-rising costs” for materials is hurting the construction workforce for both residential and nonresidential building. Fewer people to build would likely add onto delays in addressing home inventory across the country, as well as infrastructure development more generally.