Why Tampa has the hottest housing market in the U.S.

Smith & Associates Realtor Melanie Atkinson joins Yahoo Finance Live to talk about Tampa, Florida’s developing housing market, COVID housing and population trends, international property buyers, and the renting and sales rates of property in Tampa.

Video Transcript

RACHELLE AKUFFO: Tampa, on Florida’s Gulf Coast, topped Zillow’s list of the hottest housing markets, and it’s not just because of the lovely weather. To see why, I’m joined by Melanie Atkinson, Smith and Associates Realtor. Melanie, good to have you on the show. So it’s interesting because Austin actually held that top spot last year, but they slipped to number 10. And now Tampa is at the top. So what are the biggest selling points when it comes to Tampa, really beyond the weather?

MELANIE ATKINSON: Well, obviously, weather is one of the biggest draws down here. Tampa has been overlooked for many, many years. Our housing prices tend to be lower than what you’d find on the East Coast of the state. So over the last two years, we’ve had a lot of people migrating to the state of Florida.

On that Zillow list, you’ll sail out of Florida cities, Tampa being one of the hottest ones. I think it got a lot of press over the last couple of years. And people are now just starting to discover really how beautiful the city is in general. We put a lot of money into growing the cities, both St. Petersburg and Tampa. And it’s really just on the map now. So we’ve seen a tremendous amount of housing demand in this area.

RACHELLE AKUFFO: And as you mentioned being put on the map, you had the Netflix show “Selling Tampa,” putting a spotlight on having people fall in love with the area as well. But before people decide to pack up and head there, what do they actually need to in terms of relocating there, the day-to-day cost of living, even doing business there?

MELANIE ATKINSON: Yeah, that’s a great question, because what people think of as Florida prices is not what we’re seeing now. Our prices have gone up so much over the last couple of years that Florida is not on sale anymore. And even though we do have lower housing prices than, say, California, a lot of the states on the West Coast, even New York, New Jersey on the East Coast, we do have significantly rising prices for our houses.

So it is difficult to find those bargains. People come down, they want a bargain. Those are really not easy to find at all. On top of that, we’ve had a lot of changes in our insurance. And flood insurance rates have gone up a lot and homeowner’s insurance rates have gone up a lot. In general insurance, whether it’s car or home insurance, in the state of Florida is very expensive.

So people need to keep that in mind whenever they’re coming down to Florida. It is not a cheap state to live in.

RACHELLE AKUFFO: And as we’ve seen people already migrating to the Florida region, even before COVID, but how much of a game-changer was COVID in terms of home price values in Tampa?

MELANIE ATKINSON: COVID was a huge game-changer. It was like everyone who might have thought about moving to Florida all of a sudden was like, OK, well, now I’m going to move to Florida. It was a rush of people. But I think we saw that throughout the national housing market.

People were shifting and shifting their focus to homes and housing in general. So even though we saw a lot of people come down to Florida, we also saw a lot of people move around the country. And that’s really what has spurred a lot of the cash that people have on hand when they come to Florida. If they’re selling out in California, they’re selling it for a high price and they’re bringing that money to Florida.

So what we used to have where locals would try to move around and move up from one house to the next, now these locals are competing with a lot of cash from Northeastern buyers and Western buyers. So it’s really priced a lot of our local Florida people out of the market, but it’s been nice for some of the out-of-state buyers.

RACHELLE AKUFFO: And speaking of out-of-state buyers, I’d be remiss not to mention Tom Brady, who obviously relocated for work, as a lot of people did during the pandemic. But how have the demographics of some of the buyers and some of the houses that they’re looking for in Tampa, how much has that changed?

MELANIE ATKINSON: Well, our luxury market is definitely more in demand than it used to be. And a lot of that is because we’re seeing West Coast buyers, especially on the West Coast of Florida. So the East Coast of Florida has always had a large international buyers. Tampa and the West Coast has never really been a big spot for international buyers. So we’re seeing a little bit more of that.

Canadian money is coming down as well. And then we’re seeing West Coast buyers, which is, obviously, within the US. But we never had West Coast buyers on the Tampa side until COVID happened. So that’s been a really interesting change.

As far as the demographics are concerned, we have a lot of second home buyers in the Pinellas County area, which is where Clearwater is. So we have a lot of boomers coming down that are buying second homes or relocating their permanent home down here in Florida. The fact that we don’t have state income tax is very appealing for people that live in the states that do have state income tax.

RACHELLE AKUFFO: So for people who are wondering about affordability if you’re a first-time homebuyer or you’re wondering if it’s better to, perhaps, rent versus buy– what advice do you have for them?

MELANIE ATKINSON: It’s a really difficult time for first-time homebuyers. I will not lie at all. They’re competing with large corporations who are buying a lot of our lower priced properties here to use them as rentals. So it’s this vicious circle of they come down, they have to rent because they can’t find anything, and then they’re competing against the corporate buyers who are then using them to rent back to these same people who can’t find a house.

So for first-time buyers, we really encourage them to be as patient as possible, to have all of their ducks in a row as far as having a great lender, a great real estate agent to represent them to really understand the market and to take the advice of the professionals that are working around them. We do this every day, and we know what it takes to get houses.

The other thing that I really encourage first-time homebuyers to do is look outside of where you think you might want to live, go a little bit on the outskirts, and also look at new construction. New construction, we have several builders around here that are not selling to people who are buying second homes. They’re only selling to primary homeowners, which is great for those first-time homebuyers. Look at townhouses– anything that is in that lower price range that might not be appealing for the large corporations to snatch up with cash.

RACHELLE AKUFFO: Certainly lots of great advice there. And as you mentioned there, perhaps some people might get squeezed out there by some of these large corporations. Thank you so much– Melanie Atkinson there, Smith and Associates Realtor. Thank you for your time today.