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As someone looking to invest in a rental property, you'll have a vested interest in all the hottest real estate markets, considering they could be the site of your next investment.

You'll also look at things from a macro perspective. What does the national average look like in a given metric, and how does this place stack up?

Tampa's real estate market is probably one that you're considering, as it may seem like a nice place to invest. You came to the right place if you're looking for insights to help you decide.

Below is a collection of all the details you need as you begin to strategize.

Market Terms You Should Know

As you can imagine, there's a lot to get through. Before that, however, it's a good idea to cover some of the terms you should understand if you're interested in real estate investing.

First, there is inventory. This simply speaks to the number of commercial and residential properties that have gone unsold. It will be one of the indicators of what the Tampa housing supply will look like at any point.

Next, you want to keep the median sale price in mind. After all, this one will give you an idea of what you may have to spend to acquire the rental property you're interested in. The median sales price is the midpoint of the costs of Tampa market homes from highest to lowest.

Homes sold are just that. The concept speaks to how many home sales were closed during a period.

Median days on the market look at property listings to see the midpoint of the number of days they stayed on the market before they were sold.

Mortgage rates are pretty self-explanatory, as they speak to the interest that lenders will charge. One of the challenges for real estate investors and residential buyers has been rising interest rates since it makes acquiring homes more expensive.

Next, there are foreclosures, which happen when mortgagors fail to make their payments. This creates a situation where the properties are repossessed.

Tampa Housing Market Trends

Many real estate investors look at Florida as a strategic position for rental properties and other interests. They also know that Tampa is a crucial part of the state's position. That's because of the economic ties it has to the region, as well as the high population density.

Additionally, since Tampa properties can often be the poster child for affordable housing, it's attractive to buyers and can translate to the prices that renters are offered in turn.

Looking back at 2022, the Tampa real estate market saw the sale price of single-family homes increase to $389,995, which represents a 3.1% increase. The average sale price is up by 4.8%, ending up at $478,730.

The median days on the market statistic stands at 39 days, which is an increase of 457.1% over the previous year.

There has been a 19.4% decrease in sales year over year, with cash sales, in particular, falling by 35.5%.

Supply has also taken a hit, with a 15.5% decline in new listings from the previous year. Even so, inventory, which speaks to the active listings, went up by a staggering 157.6%, yielding a supply of 1.9 months.

What Factors Affect the Tampa Real Estate Market?

From the typical home value to the number of units on the market, there will always be factors that influence the movements that you see in the Tampa real estate market. Here are four of the biggest ones.

Economy

This is no surprise, considering how many things are driven by the economic state across the country. Realistically, home buyers consist of investors and regular people who are just looking to own where they live.

Different economic factors affect the capabilities and interest of both sets of people in acquiring properties. Some of the economic factors of note include inflation, GDP, employment opportunities, income levels, and more.

Government Policies

Like it or not, the role of the government includes making and upholding policies that could beneficially or adversely affect your real estate purchasing interests. Subsidies, for example, could make purchases more attractive since there are savings to take advantage of.

Mortgage Interest Rates

As indicated before, the level of interest rates will be an indicator of the real cost of acquiring properties listed on the Tampa real estate market. Thanks to factors such as the Fed's decision to use higher interest rates to battle inflation, potential mortgagors are seeing some of the highest rates in the past two decades.

Demographics

Demographics are subgroupings in the population. Race, age, and income are examples. You can typically focus in on different groups to get an idea of what real estate market activity may look like.

Will Tampa Be One of the Real Estate Markets That Crash?

Depending on which side of the fence you fall, a real estate market crash could be a serious problem or a source of opportunities. Investors are often wary of crashes, which leads them to do research and check in with expert forecasts to see what the expectation is.

Thankfully, the Tampa market is not expected to crash. Experts do believe that things will slow down not too far from now, but not so much so that you'll see a crash. Here's what makes it unlikely:

  • Buyers still have to be bidding up prices in some cases because the required inventory of roughly 6 months is nowhere near the reality.
  • Low inventory will continue to be a concern in the short term considering there is still a pretty strong demand for housing across several key demographics.
  • The lending standards of today are some of the strictest, often meaning that only those with excellent credit can even access mortgages.
  • A foreclosure crisis is unlikely, especially considering that most homeowners have a significant portion of the equity in their homes.

Tampa Bay Area Market Statistics

Sometimes, seeing the numbers listed gives you a quick understanding of the kind of market you're dealing with. Starting with housing sales from 2022:

  • New pending sales saw a decline of 5.5%
  • Cash sales saw a decrease of 35.5%
  • Total dollar volume is down to $1.5 billion, which represents a 15.6% decline
  • Closed sales have fallen by 19.4% year over year

Next, there are the demand and pricing statistics:

  • The median time to sale is up 84.4% at 83 days
  • The median days on the market stands at 39 days, which means it's up by 457.1% year over year
  • Average sale prices have gone up by 4.8%
  • Median sale prices have gone up by 3.1%

The Tampa housing supply statistics look like this:

  • Supply of inventory stands at 1.9 months which is a 216.7% increase
  • Active listings are up by 157.6%
  • Year over year, there has been a decline in new listings, which now stands at 15.5%

Tampa Housing Market Forecast

The forecast of the Tampa real estate market is something you're likely also invested in considering it could affect your prospects.

Starting with home prices, there is currently a situation where you have a high demand and low inventory. This will always mean that the value of available homes will appreciate. Even with the constant price hikes though, compared to other cities in the country, Tampa is still considered to have affordable housing.

Therefore, real estate investors are doing what they can to get in on the undoubtedly hot market. The value of properties, according to experts, is expected to appreciate even beyond 2023, which means that it's a great time to get one and take advantage of the profitability possibilities.

Next, there's demand. It's not expected to fall anytime soon. People from other states often move to Florida because of the favorable tax laws, amazing scenic views, and warm weather. With the rise of online work, some people even get to move without having to consider losing their jobs.

Of course, affordable housing is also very attractive to potential renters and buyers. This is much of what has accounted for Tampa's population growth, which is also going to mean more demand.

September 2022 saw just over 1,820 available listings for sale in Tampa. Considering the population is steadily approaching 400,000 and expected to grow, the supply is simply not enough for everyone to buy.

Again, this represents an opportunity for rental property owners who can offer a housing solution to those who are priced out or otherwise left out of the Tampa real estate market.

Nevertheless, you can see the number of people coming into play yet again, which speaks to the high demand. The supply simply cannot keep up with the strain. Note, however, that there are plans to have 10,000 homes built by 2027, and the prices are expected to be affordable.

Perhaps this could ease the inventory concerns.

Real Estate Investing Considerations

Deciding to proceed with a real estate investment can be a risky proposition. There's a lot that sounds good about Tampa, but should you pull the trigger on purchasing a rental property? Here are a few of the bigger considerations that go hand in hand with the state of the real estate market.

Tampa's Cost of Living

It's not just the fact that housing in Tampa is affordable. It certainly is and that attracts people, but the cost of living overall isn't ridiculous. Many of those who are moving to the city also realize the potential for growth as time passes.

There's a reason why so many small families and retirees choose Tampa when they are looking for a place to settle. Simply making the move is enough to increase the quality of life in a lot of cases. Consider the following:

  1. The cost of living in Tampa falls 5% below the national average
  2. While utility prices are about 15% higher than the national average, the housing expenses faced are a whopping 23% below the national average
  3. Healthcare is 25% lower than the national average in Tampa

A Booming Economy

If there's one thing that people considering a move to a city want to know, it's that the job outlook is a good one. Both residential and commercial properties see more activity if people can feel comfortable enough to find gainful employment.

Tampa's job market is pretty solid, which is yet another reason there's an influx of people. It's considered among the fastest-growing places for jobs in the entire country. Four different Fortune 500 companies have their headquarters here, which makes economic growth and work opportunities that much greater.

Profitability Prospects

As a real estate investor, the Tampa market has much greater prospects than places such as Cleveland, Nashville, and Atlanta, and projections would indicate that things will only get better.

What you need to do is try to ensure that the rental properties you purchase are near public services, shopping malls, schools, basic amenities, etc. You also want to pick a safe neighborhood. Some great choices are Tampa Palms, Sun Bay South, Old Seminole Heights, Oldsmar, New Tampa, and Riverside Heights.

Traditional Rental Areas to Consider

The Tampa housing market presents many opportunities for traditional rentals, which are more on the long-term side of things. As indicated before, you will want these to be closer to the kinds of things that would create a comfortable experience for your tenants. Additionally, if people do have physical jobs, they'd want to be as close to them as possible.

The following neighborhoods have a median sale price of under $1 million and rental income is typically at least $2,000.

  1. Oakford Park
  2. South Seminole Heights
  3. Tampa Heights
  4. Bon Air
  5. Ridgewood Park

Of these, Oakford Park is probably the best all around, with a median sale price below $600,000, 67 average days on the market, a typical rental income of over $3,000, and respectable areas to walk for your tenants.

Airbnb Rental Areas to Consider

The housing market in Tampa also presents opportunities for those who want to invest in short-term properties that can be used as Airbnbs, for example. In this case, though, the considerations would be a little different. For example, the performance of the tourism industry is one thing to consider.

After all, the people who will be using your space will likely be on vacation or looking to relax, which means you'll want to be closer to attractions and want to ensure that the walkability is good.

Yet again, the idea is to suggest neighborhoods with a median price below $1 million, but this time, considerations were also made for places that have an Airbnb occupancy rate of above 40%, since that would mean higher chances for profitability. With that said, the neighborhoods that come out on top are:

  1. Ybor City
  2. Old West Tampa
  3. Northeast Macfarlane
  4. Oakford Park
  5. West Riverfront

Ybor City wins with its impressive median sales price of $346,013. Listings here tend to be on the market for 61 days. There's an average AirBnB monthly income of approximately $2,000 with an occupancy rate of 45%. The walk score is 59, which while not the greatest, is still sufficient for people to enjoy a relaxing stroll.

Final Remarks

The Tampa housing market is often an area of focus because of the sheer potential it has. People are moving to the city for many reasons, including housing affordability, economic state, and more!

As someone looking to invest in a rental property, it's hard for you to go wrong with the city, especially if you buy properties that are appropriate for either long or short-term rentals, depending on your strategy.

Frequently Asked Questions

Will Tampa Home Prices Go Higher for 2023?

The current trends are not expected to change throughout 2023. With the low inventory, the prices are appreciating with no immediate end in sight. There is a plan to have 10,000 homes built by 2027 to tackle the inventory, but only time will tell.

What Is the Population Outlook for Tampa?

The population is steadily approaching 400,000 and is expected to continue to increase, considering the benefits that the city offers.

Is Tampa a Good Place to Invest?

Yes. With a great real estate market, a surplus of potential tenants, affordable housing, and more, it's a solid choice.

David is the co-founder & CMO of DoorLoop, a best-selling author, legal CLE speaker, and real estate investor. When he's not hanging with his three children, he's writing articles here!

Legal Disclaimer

The information on this website is from public sources, for informational purposes only and not intended for legal or accounting advice. DoorLoop does not guarantee its accuracy and is not liable for any damages or inaccuracies.

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