Tampa Housing Market Cools

Tampa Housing Market Cools

But is this just a temporary pit stop or the start of a longer cooldown?

After years of surging home prices and bidding wars galore, Tampa's red-hot real estate market is finally showing signs of fatigue. As mortgage rates have more than doubled over the past year, both homebuyer demand and home sales have fallen sharply. Consequently, we're seeing less competition, fewer bidding wars, and more price cuts on listings. So what does this mean for Tampa homebuyers and sellers? Let's take a closer look.

How We Got Here

To understand where the market is headed, it helps to look at how we arrived at this juncture. Coming out of the pandemic, historically low mortgage rates and tight housing inventory created a perfect storm. With rates bottoming out below 3% and homes in short supply, buyers flooded in trying to lock in affordable monthly payments. This ignited a frenzy of bidding wars that drove Tampa home prices up over 30% year-over-year at the peak.

However, the party couldn't last forever. In its efforts to tame stubbornly high inflation, the Federal Reserve has aggressively hiked interest rates over the past year. The average 30-year fixed mortgage rate has surged from around 3% a year ago to over 6.5% today. Consequently, the same $400,000 home that had a $1,686 monthly payment a year ago now costs over $2,500 per month.

"Rapidly rising mortgage rates have absolutely crushed buyer demand and taken a significant number of buyers out of the market," said Aaron Hunt, Broker of Avalon Group Realty Tampa. "Affordability has become extremely challenging, especially for first-time and move-up buyers."

Inventory Rising, Price Cuts Increasing

Sure enough, we're seeing evidence of the cooling housing market here in the Tampa area. As of May, new listings hit their highest level since June 2019 - up over 30% from a year ago. Moreover, homes are taking longer to sell, with the average time on market increasing 46% year-over-year according to Redfin. Meanwhile, the percentage of listings with price drops has more than doubled.

"After years of homes getting multiple offers the day they hit the market, the supply finally caught up with demand," said Hunt. "Now, many sellers are having to readjust their expectations and get more realistic on price if they want to attract buyers."

So does this mean the Tampa housing market has completely shifted in favor of buyers? Not necessarily. Although price growth has definitely slowed and competition has cooled, Tampa home prices are still up around 16% year-over-year according to recent data. And inventory, while improving, remains below pre-pandemic levels. The market has become more balanced, but likely still slightly favors sellers overall.

Looking Ahead: A Pause or an About-Face?

The big question is whether this represents a temporary cooldown or the start of an extended downturn for Tampa housing. The answer likely depends on where mortgage rates and inflation head from here.

Despite some recent positive inflation data, Fed Chair Jerome Powell has stressed that the Fed remains laser-focused on bringing stubbornly high inflation back down to its 2% target. In fact, economists at Bank of America recently stated that "housing inflation will need to come down before the Fed can think about cutting rates." With home prices and rents still rising rapidly nationwide, the Fed may have to keep rates higher for longer to restore price stability.

"While it's encouraging to see the frenzy cool off a bit, I wouldn't expect a return to a red-hot seller's market anytime soon unless mortgage rates come back down quickly," said Hunt. "Most forecasts call for rates staying elevated through next year at least. So buyers may get some continued relief in the form of more inventory and less competition."

Tips for Buyers in a Cooling Market

While Tampa real estate hasn't shifted into a full buyer's market yet, there are definitely more opportunities opening up compared to the past few years. If you're looking to make a move, here are some tips for making the most of the changing landscape:

Get Pre-Approved and Stay Within Your Budget

With rates significantly higher than just a year ago, it's more important than ever to get pre-approved and know your true budget. What were you approved for back in 2021 is likely very different now. Run the numbers carefully and don't put yourself in a risky financial situation chasing your dream home. The days of waiving contingencies and massively overbidding are likely behind us (for now at least).

"I can't stress enough how crucial it is for buyers to work with an experienced lender to understand their true budget in this higher rate environment," said Hunt. "You don't want to end up house poor by stretching too far."

Move Quickly on Desirable Listings

Just because the market has cooled doesn't mean good deals will last. Well-priced, turnkey homes in desirable areas are still getting scooped up fairly quickly. You'll want to be ready to make offers and keep some urgency if you find a property that checks all your boxes.

Don't Be Afraid to Negotiate

With more inventory and less competition, buyers finally have some leverage to negotiate. That could mean asking for seller credits, a home warranty, repairs to be made, or simply a lower price. Homes that have been sitting are often ripe for offers below asking price.

"We're seeing far less of the no-inspection, no-contingency offers that were so common recently," said Hunt. "Now, most sellers have to play ball a bit if they want to get deals done."

For Sellers: Shift Your Mindset

While the frenzy has cooled significantly, sellers need to re-adjust their expectations if they want to attract offers. Here are some tips:

Get the Price Right

After years of being able to essentially name their price, sellers now need to be much more strategic with their asking price. Study comparable sales in your neighborhood, factor in market conditions, and price your home accordingly right out of the gate. Overpriced homes will likely sit on the market much longer than an accurately priced listing.

Make It Showready

When inventory was scarcely, buyers had to take whatever they could get. Some Tampa homes were selling with multiple offers sight-unseen. In a shifted market with more choices, buyers will be much pickier. Make sure your home is decluttered, depersonalized, clean and shows well. Even small upgrades and touch-ups can go a long way in helping your listing stand out.

Enhance Your Listing

While HGTV-level staging may not be necessary, great photography and 3D tours can help grab buyers' attention online where most home searches start these days. Invest in high-quality marketing materials to help distinguish your listing and drive more showing requests.

"We're seeing that the listings tended to with more care and thought on pricing, prep work and marketing are the ones still drawing the most interest," said Hunt. "Homes that may have flown off the market in 2021 could now sit stale without the right pricing and presentation strategies."

The Bottom Line

Whether you're a buyer or seller, the name of the game is adapting to changing market conditions. While those conditions are less extreme than in recent years, both parties will still need to exercise patience, get assistance from experienced real estate professionals, and respond nimbly as the Tampa housing landscape continues to shift. Those who do will be well-positioned to capitalize on emerging opportunities.


Of course, all real estate is local. Even if the national housing market continues to lose steam, Tampa's strong population growth, diversifying economy, and popularity among relocators and investors could help insulate its housing market to some degree. Only time will tell.

For now though, buyers finally have a bit more breathing room and negotiating power. Sellers need to get realistic on pricing to attract offers. After such an extended period of frenzied appreciation, this balancing act between buyers and sellers is probably healthy for the long-term stability of the Tampa market.

If you are looking for a Tampa Realtor visit https://www.avalongrouprealtytampa.com