TAMPA, Fla. (WFLA) — Homebuyers faced competition, limited inventory, and now a big increase just in how much they need to earn to buy a home in Tampa, according to reports from real estate company Redfin. At the same time, Florida Realtors reports the inventory in the area is still tight and costs continue to rise.
Reporting by Redfin showed the way homebuyers “flocked to the Sun Belt” has caused an increase in how much money you’ll need to afford a home in the area. To buy a home in Tampa, Redfin said potential owners “need to earn $67,353 annually to afford the metro area’s typical monthly mortgage payment of $1,684.”
It’s a 47.8% rise in needed income compared to 2021, making Tampa have the “biggest increase of any major U.S. metro” to-date in 2022.
“The income needed to afford a home began climbing at the start of last year and jumped further this year as soaring demand,” Redfin reported. “Limited inventory and increasing mortgage rates led to rapidly rising sale prices.”
The real estate company said it’s a $21,791 increase from the amount needed to buy a home the year before, based on monthly mortgage costs. In 2021, homeowners needed to earn $45,562 per year.
The increased mortgage rates are part of the U.S. Federal Reserve’s plans to cut down on inflation as the costs of everything from homes to cars to eggs has gone up month after month for close to a year. Mortgage rates have risen over 5% this year, after the Fed increased interest rates for the first time since 2018.
Higher mortgage rates mean higher payments, adding to the financial burdens to buy a home. As previously reported, additional fees are a way to cool off the market, and it’s had an effect on sales.
“As Americans contend with historically high inflation, the combination of rising mortgage rates, elevated home prices and tight inventory are making the pursuit of homeownership the most expensive in a generation,” Sam Khater, Freddie Mac’s chief economist said April 14. Freddie Mac is one of two federally-backed mortgage companies.
Finished sales in Florida’s real estate markets dropped just 2.6% from 2021 to 2022’s first quarter. While the number of sales dropped, price jumps made the housing industry in the Sunshine State rise 11.5%, from $37.7 billion in the first three months of 2021 to $42.1 billion this year.
Four Florida markets are in the top 20 for emerging housing markets, with two in Tampa Bay. Sarasota and Tampa both made the list for areas with strong economies and big draws to move in, even as prices went up and inventory stayed low.
Pending sales of single-family homes were down as much as dollar volume was up, according to data from Florida Realtors. The hottest area in the state for where people want to buy a house was still the Tampa market, though Miami wasn’t far behind.
Additional data from Florida Realtors showed the Tampa metropolitan area made up 15.7% of all homes sold in the state of Florida from January to March 2022. In Tampa, 12,004 of the state’s 76,339 houses were sold, while another 4,025 were in the North Port-Sarasota-Bradenton metro.
In Polk County’s Lakeland-Winter Haven market, 3,583 homes were sold for a 5% increase over the year before, while the Homosassa Springs metro saw 1,010 homes sold.
Sebring’s metro area only had 473 homes sell from January to March.
“With the rising prices we’re seeing, despite fewer sales so far this year, the dollar volume of closed sales remains high,” Florida Realtors Chief Economist Dr. Brad O’Connor said. “Single-family dollar volume in the first quarter of 2022 came in at $42.1 billion, an 11.5% increase over the same quarter last year, while condo-townhouse dollar volume was up 16.3%, to $16.1 billion.”
Overall, homes in the Tampa Bay area collectively accounted for 27.6% of all houses sold in the state. Florida Realtors said the housing market in the past month, and across the whole first quarter, showed how rising mortgage rates and increased costs affected Florida’s homebuyers.
Inventory shortages and price hikes are not exclusive to Florida or Tampa.
Redfin said “The national median home-sale price was up 17% from a year earlier to a record high of $412,700 in March, and the number of homes for sale was down 13% to an all-time low.”
The changes in the market are affecting both single-family home purchases and condo and townhouse buys. The housing supply is tight, no matter what you’d like to buy.
“The statewide median sales price for single-family existing homes in March was $396,558, up 21.3% from the previous year, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations,” Florida Realtors reported. “Last month’s statewide median price for condo-townhouse units was $308,000, up 27.3% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.”
O’Connor is concerned about how rising mortgage rates will affect how prices increase going forward. Florida Realtors reported the inventory of homes in the state is still “tightly constrained.”