Investors are buying fewer homes in Tampa. Here’s what that means for homebuyers

According to the study, home purchases by investors in the Tampa Bay area have declined 13% since last summer new data published by real estate agent Redfin.

Taylor Marr, deputy chief economist at Redfin, said this could be an indicator that the housing market is stabilizing.

“So the entire housing market is cooling down. It’s responding and sort of dampening the high demand that we’ve had during the pandemic,” Marr said.

Tampa is among the top 10 U.S. cities by market share that saw a decline in investor buying in the first quarter.

Records of home sales and purchases from 40 counties across the country were part of Redfin’s data analysis. According to the report, investors were defined as buyers with the keywords “LLC”, “Inc.”, “Trust”, “Corp” or “Homes” in their names.

In Tampa, investors bought 4,214 homes between January and March. That’s down from a record 5,065 homes last summer, but still above pre-pandemic levels.

Despite this, investors could hold a 25% market share or share of the total value in a given market. This means that even as investors buy fewer homes, they have maintained the same value in Tampa’s housing market.

Marr said the decline in investor buying in the housing market can be explained by the rise in mortgage rates impacting demand and higher borrowing costs.

“As a result, buyers are simply being pushed out of the market, and we’re seeing a drop in demand,” he said. “And investors are not immune.”

Marr said it could be good news for individual homebuyers if there is less investor competition in Tampa’s housing market.

“They behave differently than a typical mom and pop landlord,” he said.

Investor dominance can put upward pressure on the housing and rental markets: drive up house prices, rental costs and evictions. It’s also common for first-time homebuyers to be outbid by cash-based offers in a market with many investors.

Lei Wedge, an associate professor at USF’s Muma College of Business, said that 25% of all homes sold in Tampa last year were paid for in cash. She said that’s a big jump from another peak year in the real estate market in 2006, when 8% of Tampa’s homes were bought for cash.

Less investor competition can be good news for homebuyers. But Wedge said there are other factors that make it difficult to be a buyer in Tampa’s housing market.

“Yes, you have fewer investors. You have fewer buyers. But the problem is … it’s going to be a lot more expensive on your mortgage,” she said.

Wedge explained that finding a home will be easier for individual buyers. But it can be harder for them to afford.

This is especially true given the influx of people into the Tampa Bay area willing to pay higher rents and mortgages. Wedge predicts that the market will ultimately cater to this demographic.

“I think what’s going to happen is — eventually — the city is going to push the lower-income people out of the city,” she said.

Gabrielle Paul

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Public WUSF Media

On Chelsea Street in East Tampa, Antoinette Hayes-Triplett and realtor Melisha Patel stand outside a home that is expected to close with the Tampa Hillsborough Housing Initiative by the end of the month.

CEO Antoinette Hayes-Triplett said that’s why the Tampa Hillsborough Housing Initiative is working to create innovative housing solutions for the community.

As part of its strategic plan, which received $4.7 million in funding from Hillsborough County, THHI launched a community living initiative.

“The market has changed the way we need to do business,” Hayes-Triplett said. “And we’re trying to be as flexible as we can and as creative as we can to make sure people have a place to stay.”

The community living initiative plans to provide 50 three- and four-bedroom apartments in the Tampa community at subsidized rents for people emerging from homelessness.

Last year THHI bought and converted two houses. Two more homes on Chelsea Street in East Tampa are scheduled to close next week. That comes after point-in-time data released earlier this month show a 4% increase in homelessness in Hillsborough County.

Hayes-Triplett said the initiative would like to scale up its efforts, but the biggest hurdle is getting deals amid inflated property prices and investor competition in the market.

“Right now we need 60 days to close. At that point, we lost to investors who pay: cash, location not seen, no valuation, no inspections,” she said. “That’s the market we’re dealing with.”

Gabriella Paul reports for WUSF on the stories of people living on paychecks in the Tampa Bay area. She is also a member of the Report for America Corps. So you can share your story with her.

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