Housing inventory is down, and home sales continue to increase across the state of Florida. So how is the market going to shake out in Tampa?
If you have ever visited or lived in the area, you are surely aware that the Tampa-St. Petersburg metro area is one of the hottest markets in the Sunshine State. The Tampa real estate market is thriving, and investors are always on the lookout for new properties. The Tampa Bay area hosts a population of over 3 million residents, a thriving economy and a strong job market.
The median household income in Tampa is $53,204, which places the lightning capital at 32 of the 200 cities on the Forbes Best Places for Business and Careers list. The Bay Area has a lot more than just pristine beaches and great sport fishing attracting investors to the real estate market.
Let’s explore some of the reasons why investors are so eager to get into the Tampa, Florida real estate market.
Sustainable Market Growth
There has been a lot of recent talk about housing bubbles and fluctuating home prices happening in markets all across the country. Investors are searching for a stable real estate market location for the new year. According to the Zillow Home Value Index, the median home value in Tampa is $220,100, up 2.4% from the previous 12 months.
The Tampa region has shown a sustainable and consistent year-over-year growth rate in real estate appreciation as well. Properties have appreciated from $85,000 in 2012 to a projected $220,000 for the year 2020. Historical market trends also point to a competitive market continuing from the momentum gained in 2019.
Increasing yet Affordable Prices
Compared to other parts of the state, buying an investment property in Tampa, Florida is very affordable. The average closing price for Tampa homes was $246,000 over the last month, a 7.2% increase from the previous year.
Even with the steady increase in housing prices, it remains cheaper to invest in Tampa than other cities in Florida. The average selling price in the state of Florida is $339,003. We will continue to see a trend of relative affordability, with a steady increase, in the 2020 Tampa Market.
Tampa Maintains a Strong Rental Market
By now, we know that the housing market is strong, but what about the market conditions regarding rental properties? To examine the condition of the rental market, it is necessary to perform a market analysis. However, instead of spending countless hours poring over figures, we have broken down the statistics to save you the hassle:
- Median Property Price in Tampa: $373,315
- Average Price per Square Foot: $191
- Average Days on Market: 78
- Average Price to Rent Ratio: 18
The real estate cap rates differ from city to city, but Tampa maintains a strong average compared to other Florida locations. Below is the average rate of return an investor can expect when purchasing a rental property in the Tampa market:
- Monthly Traditional Rental Income: $1,739
- Traditional Cap Rate: 1.8%
- Monthly Airbnb Rental Income: $2,717
- Airbnb Cap Rate: 3.8%
- Airbnb Occupancy Rate: 55%
Looking at all of these positive trends, it becomes quite clear that the rental property performance in the Tampa Bay area will continue to be strong in 2020.
Expanding Metro Area
Industry sectors continue to show the same growth performance that the residential sector is enjoying. The Tampa Bay area hosts a wide variety of industries. The most notable are the defense sector, financial services, and technology development. It is also home to many world-renowned medical and tech research firms.
The pure white sandy beaches and nearby theme parks, make it a prime destination for vacation, and the tourism sector is thriving. The fast-growing metro area and the ever-expanding economy is reflecting in the strong Tampa housing market.
Lack of Airbnb Regulations
The state of Florida as a whole has passed legislation that prohibits local governments from banning short term rentals. This means that rentals must be licensed through the DBPR but not city or county level ordinances exist.
Airbnb has reached an agreement with surrounding Hillsborough County regarding tourist taxes. Hillsborough alone made a staggering $673.5 million on Tourist Development revenue in the year 2019. The area has seen an explosion in the tourism sector, which is expected to continue well beyond 2020.
Final Thoughts
All indications point to a healthy and consistent real estate market with plenty of investment opportunities. The market is affordable, with lots of potential for growth. There has never been a better time to invest in housing and commercial real estate in Tampa.