TAMPA HOUSING 1Q19: Growth Continues While Production Surges in Higher Price Points – Lower Interest Rates May be Bringing Back Previously Priced Out Buyers
- Quarterly new home starts are up 17.5% YoY while annual starts are up 12.2% from 1Q18 levels
- Quarterly closings are up 9.0% from 1Q18 while annual closings are up 15.4% YoY
- This market remains relatively affordable although starts over $250k are up 18% YoY – and we see a 41% jump in new home starts priced between $350k-$400k
Metrostudy’s 1Q19 survey of the Tampa housing market shows that 2,907 single-family units were started in the quarter, an increase of 17.5% compared to 1Q18. The annual starts rate, compared to last year, increased by 12.2%, to 12,080 annual starts. Single-family quarterly closings totaled 2,701 units, which was 9.0% higher than the 2,477 closings during the 1st Quarter of last year. The annual closings rate was 11,584 units, 15.4% above the annual closings rate of 10,012 units as of 1Q18.
For the twelve months ending March 2019, annual new home starts in price ranges under $250k totaled 5,013 units, up 4.9% from the 1Q18 annual activity in prices less than $250k. New home starts in prices over $250k grew by 18.0% from 5,989 units as of 1Q 2018 to 7,067 units as of 1Q 2019. The biggest nominal gain in starts was in the $200 – $250k price band, with 375 additional annual starts within this price band and 3,656 units in total. This was 30.3% of all new starts over the last year. This was followed by 289 more units started in the $350 – $400k price band. This price band also represented the largest percentage increase, a 41% jump in starts for new homes priced $350 – $400k.
The table below indicates the current distribution of annual starts by price range:
“Current sales data show the market has rebounded to levels near what they were in early 2018,” said Tony Polito, Regional Director of Metrostudy’s Tampa market. “Lower interest rates may have brought back some buyers who had been priced out of the market. Most economists predict over 2.0% GDP growth in 2019. Our thesis is that we will bump along the top of the market for several more quarters.”
The Tampa market is carrying just 1,134 finished vacant units. In 3Q05, there were 1,685 FV units on the ground. The fundamentals are much stronger today than 2005 and while rising interest rates may cost some volume and affect prices, FV inventory won’t dictate market pricing.
MLS Single Family sales year to date thru March were up 1.0% from the same period of 2018 with 10,319 sales. Lack of supply is a significant factor, as supply is very low at 2.8 months. The median home price in March 2019 was up by 3.4% to $237,700. Prices have fallen from the June 2018 peak of $245,000 but remain up year over year. Low interest rates and lack of supply will keep prices above baselined historic average.
The table below ranks the top ten communities in the market by annual starts:
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