The Tampa FL real estate market is, indeed, moving!!  Pick your idiom . . . homes are selling like hotcakes . . . they’re flying off the shelves . . . say what?!?!  Just a hunch, but I’m guessing that’s not what you’ve heard in the news lately.

For my “executive summary” readers, here’s the conclusion: the fire sale is over.  There is certainly still value in the market, but if you really want to buy a home you have far fewer choices than you did even six months ago.  Limited supply must necessarily drive prices up at some point, which is great news for sellers.  Due to low inventory in the bottom of the market, your best opportunities for buying leverage are likely at the very top price ranges.  For those intrepid explorers who love the gritty details, read on!

Our first order of business is to dispense with average sales price decline.  Yes!  Prices are lower today than they were at the peak!  I’ve heard opinions that we’re back at market prices in the 2002-2003 range.  Assuming this is correct, if you bought before ± 2003 or after ± January of this year, you win!  If you bought in the middle . . . not so much.   However, this article is about low inventory, so on we go!

The Greater Tampa Association of Realtors® (GTAR) just published market statistics for 2011 year-to-date through July1, which indicate residential inventory is down to a low of 5.5 months’ supply on hand.  In broad general terms, that means if no new homes were listed, in 5.5 months we would be sold out.

I say “general terms” because those numbers are based on averages.  Home inventories and sales velocity vary a great deal depending on property type (single family, villas, condos, townhomes) and on price band2.   One might expect lower-priced homes to be selling faster and have less available inventory than higher-priced homes (and one would be correct).

For example, year-to-date through July 2011, homes priced up to $49K represented 2,803 units sold or 21% of all sales; 1,012 are available on the market; and there is 2.5 month’s supply.  In contrast, homes priced $1 million or over represented 65 units sold or 0.49% of all sales; 294 are available on the market; and there is 31.7 months’ supply.

The inventory-on-hand curve isn’t as smooth as you might expect between the bottom and top price bands in the market.  If you apply Pareto analysis (the “80-20” rule) to our market, 80% of all sales are homes priced at or below $200K with a current average 5.0 months’ supply.  You have to push the curve all the way to 97% of all sales (homes priced at or below $500K) before you hit an average 6.0 months’ supply.  Homes in this price range typically sell for ± 95% of asking price. 

The remaining 3% of the market (homes priced over $500K) make a dramatic jump, with an average of 19.1 months’ supply.  Homes in this price range typically sell for ± 90% of asking price.

So what does this mean for buyers and sellers?  Like so many things in Tampa FL real estate . . . it depends.  Is the home a “market” sale, or is it distressed (short sale or bank-owned)?3    What property type are you buying or selling, and in what price range?  And what are your timing requirements?  Every home purchase or sale is a very individual transaction that must necessarily accommodate all market factors as well as the wants and needs of the buyer and seller of that particular home.

So . . . is that all there is?  No!  It would be wildly unfair to have you to hang in this far and get no conclusion!  Here goes:

The impact on buyers is real and visible – do you remember McCauley Culkin’s famous “Home Alone” pose?  Hands on his face – eyes wide in shock and disbelief?  I’m seeing that in the faces of buyers who expected to see ten times as many choices at half the price of what is still actually available.

The bulk of the current Tampa FL real estate market is characterized by low inventory on hand and homes selling just below asking price.  Homes are still value-priced as the market experienced such a dramatic falloff from the peak, but at some point low supply must necessarily drive up prices4.  If the trend continues, buyers will lose leverage, and sellers will gain it.  As hard as this is to imagine in light of the past few years’ performance, we are talking about transitioning from a buyer’s to a seller’s market!

Homes at the very top price range in the market have the most inventory on hand, and sell for the largest ask-to-sell price discount.  As such, buyers in this category are currently maintaining leverage.  Sellers in this category who want to avoid discounting need to employ best-practices techniques of home preparation and presentation in order to have buyers, currently in a power position, choose their home over its competition5.

August 13, 2011

Craig H. Nowicke, MBA

Broker Associate

RE/MAX Realty Associates


  1. GTAR statistics are based on data from the Mid-Florida Regional MLS (MFRMLS).  GTAR represents ±6,000 Realtor® members.
  2. GTAR stats are broken out from $1 - $49,999; in $10K bands up to$100K; in $20K bands to $200K; in $50K bands to $400K; in $100K bands to $1 million; then $1 million and over.
  3. Discussing distressed sale market effects could generate a novel, so we’ll defer for now.
  4. One of my favorite international economics professors described this as “scampering up the price curve.”  You gotta love an econ professor with a sense of humor!
  5. We contend that all sellers, regardless of their price band, need to properly prepare (repair, update/renovate as economically feasible) and present their homes (stage to sell).  This seems like an excellent topic for another article!