Will 2015 Be A Seller’s Market in Tampa Bay? Here’s my 2015 Housing Market Forecast and Predictions!
This is the time of year when experts in every industry make predictions about what will and won’t happen in the coming year, and real estate is no different. My big forecast for 2015? We are definitely in a seller’s housing market, especially here in Tampa Bay — where we saw an 18.4 percent increase in closed sales from November 2013 to November 2014.
A lot of the discussion from real estate industry experts so far in 2015 has centered around first time home buyers, which only makes sense — there’s a new 3-percent-down conventional mortgage available for first-time homebuyers, which is great news for them. After all, a 3 percent down payment could mean the difference between homeownership and signing a rental lease for one more year.
Mortgage rates also hit near-historic lows in 2014, and that’s also great for buyers … but experts are predicting that they’ll start to rise again in 2015. So that buyer advantage isn’t going to last forever.
Demographics will have an effect on the market, too. Millennials are expected to be one of the biggest demographics in that first-time homebuyer group — about 65 percent. As this generation gets married and plans families, they’re looking for a little piece of their own American Dream, too.
Trulia’s Rent vs. Buy study said that it is 43 percent cheaper to buy than to rent in Tampa Bay (assuming you are putting 3.5 percent down and will stay in your home for seven years). So buyers are definitely big news.
But here’s why sellers are going to be even more important in the coming year: If you look at our inventory of active homes on the market in the Tampa Bay area, you’ll see it’s at its lowest level since the Tampa real estate market crashed.
People really don’t want to waste their money renting. They want to buy homes! The lack of inventory, however, is keeping them where they are, either in a home they already own and would like to sell, or renting a home.
I think one cause of this lack of homes for sale is possibly due to developers over-building rental apartment complexes. You see them sprouting up everywhere from the Westshore Business District to Channelside and downtown Tampa.
What we really need are affordable homes and condos for sale in the desirable areas where younger people want to live. (And that’s not in the suburbs.) Neighborhoods like South Tampa, downtown Tampa, Channelside, and up and coming trending Tampa Heights are popular and have very little properties available for first-time homebuyers.
What is preventing first time homebuyers from purchasing?
First and foremost is a lack of inventory that is qualified for low down payment loans. Properties that are affordable (between $200,000-$400,000), something a young couple could conceivably work into their budget, are either rehab projects or condos that don’t qualify for FHA or VA financing. These types of loans are geared toward low down payments or no money down, which are desirable for the first-time homebuyer.
First-time homebuyers don’t want to do rehab projects. They are not seasoned enough, and they don’t have the cash it takes to put into remodeling. They want homes that are ready to occupy, with modern appliances and fixtures — a place that actually feels like home. And there are many times I’ve seen homes that investors purchased to flip (thinking they could make a quick buck) with cheap finishes and sloppy workmanship.
It seems to me like many potential homebuyers — including millennials — are literally being forced to rent, even though it would be cheaper for them to buy, because there are very few homes to purchase!
There has also been talk about the “return” of interest-only loans. But according to Sonny Collova, a Tampa Bay mortgage broker, those loans “never really left.” Interest-only loans are targeted toward high-income applicants, and stricter guidelines apply for these loans.
“The only borrowers that can qualify for interest-only loans are likely too conservative to want to get an interest-only loan,” says Collova.
There’s a big challenge for homebuyers going into 2015. I hope homeowners who have been on the fence about listing their homes can see the opportunity in the market we’re heading toward, where there will be buyers waiting and watching for the properties that just might turn into their dream home.
My advice to homeowners in the Tampa Bay area is to get their homes ready prior to listing them for sale. Spend a little money fixing things that could prevent a buyer from getting a mortgage, such as a leaking roof, termite infestation, rotted wood and cracked windows. If you can advertise your home for sale as FHA or VA approved, you will have a better chance of selling for a higher price. Speak to a Realtor about the best way to market your home for sale, and make sure all repair work is permitted.
Licensed Realtor since 2002, Tampa Bay’s own Rae Catanese regularly gives expert advice and insider tips about the Tampa Bay real estate market via her blog, The Tampa Real Estate Insider. Her blog has offered home buyers, sellers and those relocating to Tampa Bay with in-depth analysis of hot topics and the latest real estate trends. She’s also a contributor on Inman News, Inman is the industry’s leading source of real estate information.