Tampa, Florida is expected to be the hottest U.S. real estate market in 2022, according to Zillow.
Driven by historically low-interest rates, a longstanding robust economy, and a relatively mobile population, some regions of the United States are experiencing a dominant growth in real estate demand. Prices in some areas, particularly in several Sun Belt markets, have risen dramatically, and many sellers are even enjoying bidding wars immediately after listing their properties.
A hot real estate market translates to a seller’s market, where the demand is measurably outpacing the supply.
This trend will continue through 2022, according to a Realtor.com report published on January 7. The Home Purchase Sentiment Index® (HPSI) by Fannie Mae indicates the heated real estate market should continue even in light of potentially rising interest rates. The current HPSI, which gauges attitudes, intentions, and perceptions of home buyers and sellers, compares the 74.2 sentiment rating of December 2021 versus the 74.0 rating in December 2020 that preceded the 2021 bullish housing value performance.
Projecting the Hottest Housing Market for 2022
According to Zillow, despite the continuing pandemic, many of the same elements that drove the housing market to new heights in 2021 should continue well into 2022.
Jeff Tucker, Senior Economist at Zillow, has awarded Tampa, Florida, the Number One Hottest Housing Market designation. Last year’s leader, Austin, Texas, is expected to cool off slightly to a 10th rank.
Following Tampa, the rest of Zillow’s Top 5 Hottest Housing Markets for 2022 includes other southern cities. Along with Tampa, these cities currently exhibit strong economic fundamentals, including solid job growth, fast-moving home inventories, and a growing number of buyers competing for relatively few homes.
- # 1 Jacksonville, FL
- #2 Raleigh, NC
- #3 San Antonio, TX
- #4 Charlotte, NC
The Tampa-St-Petersburg region offers many advantages for those who may be relocating. Besides its robust local economy, the area features world-class entertainment, plenty of outdoor activities, great weather, seaside recreation and fishing, the presence of successful major sports teams, and top entertainment venues.
Locations with low projected job growth and less favorable demographic trends like New York, Chicago, San Francisco, and Milwaukee are not expected to have the same momentum as the hot real estate markets but should still see home price increases due to a limited supply of available homes.
Today’s Market Trends: Key Drivers
A closer look at the impact of the current economic boom of the Tampa housing market highlights several significant trends that are expected to continue at least through the coming year, despite potential interest rate increases.
Home Price Increases
Average selling prices continued to rise during 2021 throughout the nation and, notably, throughout the Tampa market. Several factors contributed to the higher demand, including historically low mortgage rates, demographic and job-related shifts, and pandemic-driven decisions about where people chose to live.
The significant demographic shift to Tampa and warmer markets came from retiring and downsizing seniors longing for a warmer climate. With fewer people selling and moving out and significant “underbuilding” during the past decade, today’s supply cannot match the demand.
While contractors struggle to build more new homes, current disruptions in the supply chain for materials and appliances have inhibited the increase in available homes and significantly raised the cost.
According to Zillow, these trends are continuing and expected to last well past 2022.
Limited Inventory and Short Time on the Market
Besides the shortage of new homes, Tampa’s supply is limited by the number of sellers willing to sell. After all, in a highly desirable market like Tampa, many homeowners are unwilling to sell, especially when buying a different home in the same area is rising at the same rate.
When the demand significantly exceeds the supply, buyers are forced to move faster and pay more than they expected to secure a home. Realtors strategically price homes to attract several buyers, create competition, and even set up bidding wars. In many instances, homes in Tampa and other high-demand markets sell at prices higher than the original list price, often for cash.
As a result, sellers can assume considerable pent-up demand in the market will remain well into 2022.
Growing Job Market and Demographic Shifts
Housing demand in markets like Tampa that are adding, rather than losing, jobs tend to develop greater demand for housing. According to Zillow, Tampa added 0.63 more jobs in 2021 than new housing units, indicating a further pending rise in demand.
As for age-related demographic shifts, baby boomers and older Gen Xers continue to assail their longstanding dream of retiring to a warmer climate.
Buying or Selling in the Nation’s Hottest Real Estate Markets
Whether selling or buying in Tampa, preparation is essential. Working with a proven real estate professional helps buyers and sellers benefit from current market knowledge, behaviors, and strategies to make the best possible deal.
If you are financing, buyers should secure a mortgage preapproval before starting.
Some buyers who expect competitive bidding may offer a small percentage above the asking price if the home quality warrants.
Other buyers may try to move up the seller’s priority list by making a cash/no contingency offer, then perhaps finance a portion of the purchase after the closing.
A Realtor who remains on top of the market can provide the best guidance in these circumstances.
Graystone Investment Group
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Contact us if you’re ready to dive into the real estate market. Whether the type of real estate investing you want to do is wholesaling, buy-and-hold, commercial investment, or fix-and-flips, we can help.
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