JASON’S “REAL TALK”

The market story is largely unchanged from the last few months. The basic story is still low inventory and strong demand, which is being fueled by low interest rates and a rebounding economy. The absorption rate stayed at historic highs in February. Absorption rates for single family homes were 152%!!!, and 84% for condos and townhomes in February. These are historic numbers to be seeing. Reminder, Absorption Rate “is used to evaluate the rate at which available homes are sold in a specific market during a given time period. It is calculated by dividing the number of homes sold in the allotted time period by the total number of available homes.” We continue to see multiple offers and bidding wars on almost every move in ready property that hits the market. The average new listing receives four offers! This is a very strong sellers market.

Commercial real estate continues to rebound, albeit unevenly among the sectors. Industrial, Vacant Land, and Multi-Family continue to lead the market with softer conditions for large office space and retail. New Development has started to come back from the pandemic pause, but is being hampered by the cost of land, labor, and materials. Lumber prices are up 171% since last year! St. Pete actually lags behind it’s peers in Tampa Bay for new development, but you couldn’t tell that by looking around. While we are building at a slower pace than we have in previous years and compared to our peers, we have less land and had record new development over the last several years. We love a lot of the new projects being built in the Tampa Bay market. We continue to see growing economic activity in our market that has been building since the fall. The new year has accelerated that trend and we are seeing increased interest on our commercial listings. Food and beverage businesses are roaring back now that the economy is opening up and more and more people are getting vaccinated. Retail is another sector that is showing some rebound movement. We continue to remain bullish on the long-term prospects of St. Pete, and Tampa Bay more broadly.

We continue to watch the broader economic activity and the pandemic. We remain hopeful on both fronts. Vaccinations are going out in larger and larger quantities. Almost 3 million doses per day on average! While cases are currently rising this seems to be due to some reopening, spring break, and the variants. We still believe that the current trend with vaccinations combined with warmer weather gives us hope for the mid to late summer or early fall. There is a lot of pent-up economic demand waiting to be unleashed once we get the virus under control. We’re already seeing some of this unleashed here in Tampa Bay. Anyone see the crowds for spring break!?!

On the economic front we see a few different stories unfolding. Congress passed the $1.9 trillion dollar “Amercian Rescue Plan” which will certainly help to stimulate our rebounding economy. The Federal Reserve is committed to keeping interest rates low even with some potential for rising inflation rates. The 10-year treasury, which is what mortgage rates loosely track, has started to rise. Mortgage rates have slowly risen as a response. We’ve seen a slight pullback in the 10 year treasury rates this past week, but we expect that trend to reverse in the near future. Despite any increase, mortgage rates are still at historic lows. The stock market has rebounded from its brief dip with some drama along the way. The key lesson from the incident is don’t over leverage. The stock market mostly affects the luxury single family market and the investment property market.

We’re always happy to chat one-on-one with you about the market, and provide free valuations of any property.