Investors are buying homes in Tampa Bay at record rates, leading to fierce competition

For Lou Brown, a broker with a firm in Midtown St. Petersburg, it used to be unusual to represent a prospective buyer who had lost his dream home to an investor in a bidding war.

Well, it’s harder to imagine cases where that didn’t happen.

“It is very difficult for regular homebuyers to actually compete with the investors who are stepping in with their higher offerings,” he said. “That’s exactly how late it is.”

From July through September, investors bought Tampa Bay homes at a record rate, according to data analyzed by Redfin, which begins to measure in 2000. In these three months, every fourth house sold was bought by an investor, for a total of almost 5,000 properties.

Tampa Bay’s share of investor purchases was even above the record-breaking national average of 18 percent and ranked the seventh hottest metropolitan area for investors in the country. No other state except Florida had more than one city in the top 10. The Sunshine State had four – with Jacksonville in fourth place, Miami in fifth place and Orlando in eighth place.

This graph shows the proportion of home purchases made by investors nationwide, which reached a record level in the third quarter. [ Courtesy of Redfin ]

This high concentration of investors has made it difficult for ordinary homebuyers with mortgages that are easily outbid by companies that pay all cash – often at more than the asking price. Some of the busiest activity takes place in the pockets of Tampa Bay, which includes the few remaining affordable options that longtime residents, many of whom are minority groups, price out.

Local renters trying to break into home ownership are hurt the most, said Sheharyar Bokhari, Redfin chief economist.

“Not only do you have to compete with other New York homebuyers for a lot more money, but there are investors who have all the money,” he said. “This is really worrying for these people.”

With home prices up around 20 percent last year in Tampa, people are “coming out of the woods” to make quick money by doing flips, Bokhari said.

“Certain markets like Florida and the Sunbelt have drawn a lot of people there over the past year, and these are areas where (investors) are most represented.”

Investors began to become bigger players in the real estate market after the real estate crash that sparked the Great Recession.

But recent spikes in home and rental prices, as well as stock market volatility during the pandemic, have made residential real estate investments even more attractive, Bokhari said. Turning around and renting out houses are both lucrative offers.

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Redfin defines “investors” as buyers with certain keywords in their name, including “LLC,” “Trust”, and “Corp.” aimed at targeting both large institutional real estate investment companies and mom and pop businesses. Redfin compiled its data by combing through the county’s property records.

In the third quarter, every fourth home purchase in Tampa Bay was made by an investor, a record high. [ Courtesy of Redfin ]

Chris Lai, a Tampa realtor at People’s Choice Realty, has noticed more investors. And they recently started to behave in new ways. For a while these buyers focused only on new builds. Now they’re also bumping into older homes, he said, and are generally interested in anything under $ 500,000. For these properties, investors are ready to beat the asking price, he said.

“It’s not the old days,” said Lai. “You are ready to go over the estimate now. That was never the case before, but … they will be there in the long run. “

The high level of investor interest is good news for some, including property owners, who are seeing their property values ​​skyrocket, said Michael Thompson, a Pinellas-based real estate agent at Keller Williams.

“People who bought their houses maybe three or four years ago … are already sitting on gold mines,” he said. “In my opinion, it’s all driven by these hungry investors, cash buyers, and first-time buyers.”

All activity is another indicator of the meteoric surge in Tampa Bay’s attractiveness to people flocking from across the country, Thompson said. Even though prices have skyrocketed in Tampa Bay, they’re still relatively cheap for folks hailing from expensive cities in New York and California, which is what drives “boatloads of bar purchases,” he said.

Nevertheless, Thompson also represents a first-time buyer who has been looking for an apartment for nine months. His client was recently beaten at a house in Clearwater for which he had bid $ 10,000 above the asking price. It closed for $ 70,000 more.

“It just depends on which side of the fence you’re on,” Thompson said. For regular buyers, “This wild west, chaotic kind of cowboy midtown shootout was made.”

Some Tampa Bay zip codes are particularly attractive to investors, Redfin’s analysis found. St. Petersburg’s 33712, where Brown’s office is in the southern part of the city, ranks # 1 with a whopping 37 percent of third-quarter purchases from investors. Number 2 was Ruskin 33570 at 35 percent, and Ybor City zip code 33605 was third at 34 percent.

This map shows the top five postal codes in Tampa Bay with the highest percentage of investor home purchases. [ Times ]

All three of these zip codes have higher percentages of black or Hispanic residents and lower median household incomes than the Tampa Bay average, according to the census data.

Brown, a longtime St. Petersburg resident and realtor, said he understood that cheaper homes in his area were good values. The high density of shopping also drives up the costs for the many black families who have lived there for years, including many tenants.

“This was the zip code that suffered the most, which has had all sorts of declines since the 50’s. As African Americans moved into the neighborhoods, whites emigrated, and it became harder to get finance, property values ​​fell, ”he said.

Brown said he saw similar trends in other US cities, but it was “interesting” to see it happen “right before your eyes”.

“Before, everyone invested on the north side until that was saturated and then they came to the south side,” he said. “Affordable housing, damn it.”

Brown said today’s trends are almost the opposite of white flight.

“Sometimes there is a sense of urban relocation because they wait until the property is at its lowest and the bottom end of the (income) spectrum lives there,” he said. “Suddenly the residents who were there are no longer there.”

The post Investors are buying homes in Tampa Bay at record rates, leading to fierce competition first appeared on Daily Florida Press.

from Daily Florida Press https://dailyfloridapress.com/investors-are-buying-homes-in-tampa-bay-at-record-rates-leading-to-fierce-competition/