TR_November_2020

HOME PRICE AND INVENTORY

Tampa MSA Home Price Forecast The demand spurred by historical- ly low interest rates and compara- tively high rental prices will continue to motivate buyers to compete for reduced inventory supply into the fall and winter. If a new stimulus package is introduced, this could provide the additional capital for a down payment and drive another surge in new-buyer demand. Forbearance policies have been extended through the end of the year, which contributes to the inven- tory shortage by limiting the natural turnover of resale inventory. For- sale supply is down over 30% YoY as of July, and home prices will remain supported given the extra demand for limited inventory. Risks include increasingly tighter lending restrictions, a slow (or re- versing) recovery for the job market, new-buyer attrition, and increasing defaults from non-GSE loans. 2020 (H2) SFR Housing Price Forecast: +1% to +3% In January 2021, the housing market could implode… or not! At the turn of the year, forbearance and eviction programs are set to expire. This is unlikely to happen, as a huge flood of defaults would hammer banks and servicers while eviction filings overwhelm the courts. Opening the floodgates also has the undesirable side effect of kicking people out on the street in

the middle of winter. Regardless of the administration, there will likely be new policy extensions, or new rules to start processing the backlog of non-paying borrowers and renters in a tiered manner. Outside of the above, 2021 Tampa home prices should remain stable and even increase. Mortgage interest rates are predicted to remain low through next year and have made mortgage payments cheaper to buy than rent. If COVID outbreaks remain con- trolled, the job market can have a faster recovery. Real (non-stimulus) income will stay flat or decrease slightly as the economy ramps up. Any dip in prices should encourage demand from both homebuyers and investors Risks for 2021 include variability around expiring forbearance and eviction policies. Extended evic- tion protection is putting smaller landlords in a tough spot and could cause a spike in distressed proper- ties. Once the consumer protections expire, spikes in foreclosures and evictions will have a negative effect on prices. 2021 SFR Housing Price Forecast: +2% to +6% Disclaimer: The variability around this forecast is wide and dependent upon data available as of July 2020. The severity and duration of the COVID-19 epidemic, as well as the response of the public and policymakers, continues to change daily.

Coming into 2020, Tampa SFR home prices have been rapidly appreciating, supported by low housing inventory, population increases, steady job growth, and wage increases. As of July 2020, the median single-family home value in the Tampa MSA was just above $270,000, an eight-year increase of 98 percent and averaging over 11 percent YoY growth since 2012. For those who bought at the height of the market in 2007 and held on, the median home price has just recently breached the previous peak. The Tampa MSA ranked 8th for 2019 single-family construc- tion permits. The Census Build- ing Permit Survey shows 23,000 total unit permits and 14,600 SFR permits in 2019. The market was oversaturated with new construc- tion before the housing crash, and builders slashed production to less than half of the historical average between 2007-2016. From 2017 forward, builders have been adding inventory at or above historical average. Currently, steady pop- ulation gains and below average construction rates has resulted in a substantially under-built mar- ket. Construction output is finally increasing, but will take time to catch up.

Current Rent Price

Rent vs Income

Current Home Price

RENTAL RATES As of July 2020, the median

three-bedroom, SFR home in the Tampa MSA is $1,670/mo. Across the metro, ZIP-code level three-bed- room SFR rents have a range of $1,200 to $2,100. Tampa ranks 21st in 5-year SFR price appreciation, with rent prices increasing nearly 30 percent. Landlords have gotten overzealous in the last two years, increasing over 15 percent.

3Bd SFR Rental Price

Rent vs Income

SFR Home Price

$1,200

$2,000

25.0%

45.0%

$185,000

$325,000

88 | think realty magazine :: november 2020

Made with FlippingBook Online newsletter