August 7, 2024
mwoolley_specialevents@tbba.net
From one of the nation’s highest inflation rates to one of its lowest, the Tampa-St. Petersburg area has made a surprising reversal.
Tampa Bay had a 1.8 percent inflation rate for the 12-month period ending in May 2024, according to the Consumer Price Index. That’s a stark change from the 11.2 percent inflation rate in 2022, and experts cite two key factors: Economic development and residential construction.
Increases in new home building have been cited for reducing inflation and increasing housing affordability. A News Nation report noted that an influx of new homes has cooled competition, but Redfin senior economist Elijah de la Campa sees this as a good step.
“More supply is the best way to bring down prices and combat the housing affordability crisis buyers are facing today — and that’s exactly what’s happening in parts of Florida,” de la Campa said.
According to a recent Redfin report, the median rent price in Tampa declined 6% in June from a year earlier, which was “the largest on record.” Redfin attributed the decrease to a rise in apartment construction. It’s also worth noting that only Texas is currently building more homes than Florida.
Tampa Bay’s economic development is also viewed as a positive, and the recent approval of the historic Gas Plant District project in St. Petersburg will only add to the burgeoning developments, driving job creation and attracting more residents.
A dip in mortgage rates to below 6 percent, and a possible fall reduction in interest rates from the Federal Reserve are also seen as positive signs. More buyers will emerge as interest rates fall.
However, in a recent TBBA presentation, Oliver Radvin, Senior Vice President for John Burns Research & Consulting cited some potential head winds. While noting Homebuilders still have competitive advantage versus the resale market, he cautioned that resale listings are rising and could become a threat.
Radvin also noted that competition for land positions and for sales has increased, and net in-migration and job growth have slowed in the local market.
Finally, property insurance rates and Florida’s unpredictable storms also could stem Tampa Bay’s surge. For now, the positive signs outweigh the negative indicators.