Let us discuss why Tampa is so highly ranked for real estate investing. Tampa investment properties are affordable with good annual appreciation potential. If you are looking at Tampa real estate investment, you could find plenty of generic superlatives for it. However, the reality is that there are plenty of hard facts that justify investing in Tampa real estate.
Tampa Bay area has been named one of the nation’s top 10 markets for real estate investment several times in the past. Its unemployment rate is less than 3%, and and it is the fastest growing city in the state of Florida. There are a number of economic and development prospects attached to this market.
Strong demand for rentals, limited opportunity for would-be home buyers, excellent future appreciation of Tampa investment properties and a number of other factors make Tampa a good choice for investing in real estate. Others move here for the cheaper real estate and lower cost of living, 23% below the U.S. average. The population growth fuels demand for housing, and that’s in short supply.
Interesting Facts About Tampa Florida And Its Real Estate Market
- Tampa has an unemployment rate of 2.6%, down from 2.7% in November 2019.
- Tampa is Fastest growing city in the state of Florida.
- Moderate price increases expected in 2020.
- Growing population fuels housing needs.
- Median Household Income: $54,912.
- Cost of living is 5% lower than the national average (Payscale.com).
- The average income of a Tampa resident is $29,704 a year (Bestplaces.net).
- The Sales Tax Rate for Tampa is 7.0%. The US average is 7.3%.
- The Income Tax Rate for Tampa is 0.0%. The US average is 4.6%.
- Home Owners: 61%
- Single Residents: 39%
- Median Age: 37
- College Educated: 33%
- Transportation: 94% people commute by car, public transport available.
- Tampa is an extremely ethnically-diverse city with a variety of racial and ethnic groups.
- The people of Tampa are tilting from multi-family to single family homes.
- There are accelerations expected in new single-family household formation in the Tampa FL Real Estate sector.
- Listed inventory for sale, as measured as a percentage of total stock of real estate in Tampa FL, is at its lowest recorded level in more than 30 years.
- Growth in single-family housing, both owner-occupied and rental in 2020.
- Older Millennials are beginning to make the move from apartments into single-family dwellings.
- The median price of new homes to increase by 4.5% (Zillow).
- Investors are shifting their focus more significantly in favor of single-family rental homes.
- There’s a two-month supply of resale inventory, which is quite low.
- Tampa is ranked No. 2 in the United States for people moving into the area, based on U-Haul truck rental pricing.
- A consumer preferences survey by John Burns Real Estate Consulting reveals that three community features important to buyers are safety, location and street appeal.
- The John Burns survey also shows that important home features are design, price and function.
- The vast majority (84 percent) of buyers desire a detached, single-family home, and 62 percent expect to pay $250,000 to $450,000 for it.
Some of the above mentioned statistics on real estate in Tampa FL have been taken from Laker/Lutz News.com.
10 Reasons Why Tampa Is The Best Place For Real Estate Investment
1. Tampa Investment Properties Are Affordable
The Tampa real estate market was ranked among the hottest market in rental real estate in 2019, and the reason was because property is so cheap here compared to other prime rental markets in the state. Homes here are so cheap, relatively speaking, that it ranked first among affordable markets for first time home buyers. It’s one of three cities leading the gain in the S&P CoreLogic Case-Shiller National Home Price Index. Nationally, home prices rose 3.5% in November 2019. Tampa came third with a gain of 5%.
The median home value for homes in Tampa, FL would increase by 4.5% by Feb 2021, according to Zillow's predictions. Tampa is currently a hot seller’s real estate market. The demand is exceeding the supply, giving sellers an advantage over buyers in price negotiations. In other words, there are less homes for sale than there are buyers in the marketplace.
2. Tampa Single Family Rental Homes Are Going Strong
Tampa Bay home values went up by double digits in 2018. Prices for single family homes increased in Pasco and Hernando due to a shortage of properties relative to demand. The median price of a home in Pinellas increased 14% while sales volume fell 12.8%.
Nor can we expect an influx of new home construction to help meet the shortage. This will cause many potential home buyers to become renters or bid up the few properties on the market. This makes the Tampa area a great place for those who want to buy single family rental properties.
Currently, there are 1155 homes for sale in Tampa on Zillow, an online real estate database company. Additionally, there are 275 homes for rent. Under potential listings, there are about 37 Foreclosed and 279 Pre-Foreclosure homes. These are the delinquent properties that may be coming to the market soon but are not yet found on a multiple listing service (MLS).
- The median list price per square foot in Tampa is $192, $199, which is higher than the Tampa-St. Petersburg-Clearwater Metro average of $148.
- The median price of current listings in Tampa is $314,900 while the median price of homes that have been sold is $271,900.
- The median rent price in Tampa is $1,600, which is higher than the Tampa-St. Petersburg-Clearwater Metro median of $1,585.
3. Flippers Are Struggling Because Home Prices Are So High
A Jun 2018 article in the Tampa Bay Times said that the area’s flipping frenzy may come to an end because of the appreciation of home prices. The number of flipped homes fell 13% between 2017 and 2018. House flippers are having to pay so much for homes that they can’t clear much of a profit on many properties after the renovations and carrying costs.
The 34668, 33617 and 33763 zip codes were still profitable for flippers who could find cheap homes that were often well below $100,000. For everyone else, it means home prices are solid and steadily rising but not in the midst of a boom destined for a bust. Conversely, there are still plenty of opportunities for Tampa real estate investment for the “buy to let” crowd.
4. Tampa Multi-Family Housing Is Phenomenal
Freddie Mac ranked Tampa one of the top multi-family markets in the United States in 2017. Their forecast projected multifamily growth of 4.4% because vacancy rates hovered a little over 5.2%. That made Tampa one of the top seven markets in the country for multi-family investment, rivaling markets like Seattle and Phoenix. West Shore offers high rents, as does Downtown Tampa. That makes the Tampa real estate investing an excellent choice for investors wanting to put their money down in apartment buildings and condos.
5. Tampa Downtown Redevelopment Provides Opportunity
A multi-billion dollar downtown development is underway by the waterfront. Tampa’s waterfront has attracted a wave of construction estimated to be worth $13 billion. Water Street Tampa is, by itself, a 3 billion dollar, 16 block development. It is near the University of South Florida’s new college of medicine intended to be the center of a medical technology cluster.
This will provide a mix of new residents, commercial growth and industrial redevelopment. The end result is intended to be a walkable community in downtown amidst attractions like the convention center, arena and aquarium. And all of it will be connected by the riverfront. These projects and others already doubled downtown’s population to 8,100 in 2016. Continued growth will only fuel the downtown Tampa real estate investing.
6. West Tampa Is Its Own Opportunity
West Tampa is full of large, often historic buildings that are prime property for redevelopment. Mixed-use properties are a key part of redevelopment here. It is also logical that property would start going up in value here, since there is already redevelopment in South Tampa, downtown Tampa and the West Shore Business district. The long-term potential for West Tampa is good because it is cheaper than the areas being renovated now, and residents priced out of the newly revitalized areas will start to move into West Tampa.
7. Tampa Real Estate Appreciation Rates
The total value of taxable property in the Tampa Bay area is expected to rise at near double digit values by 2021. In unincorporated Hillsborough County, appreciation was about 10%. In Tampa, it was 10.4%, while St. Petersburg saw increases of 9.5%. In Pasco County, taxable values rose 8.5%. However, this is well below the 15% and 20% taxable rise in property values before the 2006-2007 housing collapse.
Tampa real estate appreciated 32.42% over the last ten years, which is an average annual home appreciation rate of 2.85%, putting Tampa in the top 20% nationally for real estate appreciation, according to NeighborhoodScout’s data. Appreciation rates are so strong in Tampa that despite a nationwide downturn in the housing market, Tampa real estate has continued to appreciate in value faster than most communities.
Looking at just the latest twelve months, Tampa appreciation rates continue to be some of the highest in America, at 11.74%, which is higher than appreciation rates in 97.12% of the cities and towns in the nation. Based on the last twelve months, short-term real estate investors have found good fortune in Tampa. Tampa appreciation rates in the latest quarter were at 3.39%, which equates to an annual appreciation rate of 14.25%.
8. Long Term Trends Are Promising
Tampa has been leading the state in job growth. This is fueled by companies like Amgen and Johnson and Johnson relocating here. The growing medical technology hub is expected to attract educated, well-paid residents to the area. That will cause both rents and property values to rise, since there are no more large open parcels to develop and smaller lots are being snapped up for redevelopment.
Forbes reported in March, 2018 that Tampa had a price to rent ratio of 18. A low price to rent ratio means the new resident should buy instead of rent, whereas a higher ratio is better for renters. A ratio that is increasing dramatically is a warning sign that the housing market is going to crash. This ratio means Tampa real estate investment is nowhere near overpriced. It is Naples with a ratio of 27 that investors should avoid.
9. The Area Is Tax-Friendly
Florida has no state income tax for individuals. Depending on your situation, you may owe a 5.5% state franchise tax. Florida has a lower overall tax burden of 8.9%, 34th out of the 50 states. Compare this to states like New York and Illinois where property tax bills may exceed your mortgage. If you’re living the adage that it is what you keep, not what you make, that matters, you’ll want to opt for real estate investing in Tampa over higher tax jurisdictions.
Regarding property taxes in Florida, though the state government does not collect any, local governments receive much of their funding through these taxes. These rates are assessed at the local level and can vary by county, and they are based on the value of the property. Property taxes in Florida are some of the highest in the country, although there are several exemptions to try to lighten the load on some Floridians.
10. The Area Is Landlord Friendly
Florida is landlord friendly. For example, Florida doesn’t have rent control laws that can wipe out a property owner’s return on investment once passed. Florida doesn’t require a written lease, though you should have one. This certainly means there are few rules regarding what a landlord can and cannot do. Security deposits can be as high as you think they need to be. If the tenant intentionally damages the property, you can order them to leave in seven days.
Let Us Help You In Buying Your First Investment Property
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market area, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing and interest rates.
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Remember, caveat emptor still applies when buying a property anywhere. Some of the information contained in this article was pulled from third party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
- West Tampa potential
- Appreciation numbers
- Downtown redevelopment
- Single family home appreciation / flipping
- Tampa single family home appreciation
- Freddie Mac rates Tampa top multifamily market
- 1st in affordable for first time home buyers
- Rent ROI
- Florida tax-friendliness
- landlord friendliness