Sales were up and prices were up, but the key word for the 2016 Tampa Bay residential real estate market was “low” – as in inventory levels. Buyers showed strong interest and sales were up for the year versus 2015, but there simply weren’t enough homes available on the market to meet demand.
Inventory levels in 2016 reflect a solid sellers’ market.
In real estate, a six-month supply of available properties – which means the time it would take to sell all of the homes for sale at the current sales pace – is considered a balanced market, one that favors neither buyers nor sellers. Anything less than a six-month supply is typically a sellers’ market and more than six months’ worth is a buyers’ market. Inventory levels in our region have been on a downward trend, and the year ended with a 2.9 months’ supply – still a solid sellers’ market.
Seller uncertainty contributed to the low inventory.
Two things seemed to contribute to the low inventory. The housing bubble burst of 2008 is still fresh on the mind of some homeowners, who remain reluctant to list their homes for sale. Additionally, the 2016 presidential election consumed people’s attention and created a sense of uncertainty, causing some to temporarily delay any real estate transactions, though there was a small surge in activity when it was over.
The 2016 market fared well despite those challenges.
With those factors in mind, here’s a look at how the 2016 market-wide numbers compared to 2015. The figures below are from the MLS1 for Hillsborough, Pasco, Pinellas and Polk counties, all property types, in all price ranges.
Properties Sold: 69,680 in 2016 vs. 67,721 in 2015, an increase of 2.9%
Average Sales Price: $235,178 in Dec. 2016 vs. $208,562 in Dec. 2015, an increase of 12.8%
Property Inventory: 16,421 in Dec. 2016 vs. 18,971 in Dec. 2015, a decrease of 13.4%
Days on the Market: 61 days in Dec. 2016 vs. 67 days in Dec. 2015, a decrease of 9%
Overall, things look very good. Another notable statistic is that 50% of the listings sold in the last 12 months sold in the first 30 days – an indicator that demand is strong and sellers are being realistic in their pricing.
The luxury market also enjoyed a strong 2016.
Likewise, the luxury market also did pretty well in 2016. Properties priced at $1 million and above typically take longer to sell because there are fewer potential buyers, but prices and the number of properties sold went up. Here are the stats2:
Properties Sold: 628 in 2016 vs. 538 in 2015, an increase of 16.7%
Average Sales Price: $1,633,077 in Dec. 2016 vs. $1,459,385 in Dec. 2015, an increase of 11.9%
Property Inventory: 796 in Dec. 2016 vs. 691 in Dec. 2015, an increase of 15.2%
Days on the Market: 169 days in Dec. 2016 vs. 138 days in Dec. 2015, an increase of 22.5%
Mortgage rates, inventory levels and buyer demographics are the areas to watch in 2017.
Whether or not these market trends will continue in 2017 depends on a number of factors, including a few worth watching closely. The first is mortgage rates, which have started to tick up. That could encourage any buyers or sellers who have been on the fence that now is the time to act. And if more potential sellers become motivated to list their homes, that could help bring inventory levels up. Finally, keep an eye on two groups of potential home buyers: Millennial first-time buyers and foreign buyers. Both have slowly been making their move into our housing market, but they have the numbers to really make an impact in the year ahead.
1. Based on statistics for residential single family, condominium and townhouse properties in Hillsborough, Pasco, Pinellas and Polk counties at all prices as reported by MarketQuest on Jan. 3, 2017, for the period of Jan. 1-Dec. 31, 2016. MarketQuest includes data from My Florida Regional MLS. 2. Based on statistics for residential single family, condominium and townhouse properties in Hillsborough, Pasco, Pinellas and Polk counties at prices of $1 million and above as reported by MarketQuest on Jan. 3, 2017, for the period of Jan. 1-Dec. 31, 2016. Data is deemed reliable but not guaranteed.
By Charles Richardson
Regional Sales Vice President, West Central Florida
Coldwell Banker Residential Real Estate