As I write this it is Monday May 11th, 2020 and we are just starting to return back to normal after the coronavirus outbreak. We have yet to see what kind of economic fall out will come from all of this but it made me stop and think about how it will affect the real estate market in the St. Pete area. I’ve done some research into how recessions have affected the Florida market in the past and it seems that it is one of the most cyclical in all of the nation – some older folks who have been through multiple recessions expect it to come down significantly after the past 10 years of steady appreciation. This is what history has taught us and in some respects it is likely to become true again.
As an agent who represents 90% buyers, I’m hoping we will see a break in the seller’s market momentum. With that said, I also wanted to explore the idea that the current St. Pete market may not get hit nearly as hard as the Florida market in general. I can see a temporary dip in this seller’s market but I don’t think it will ever crash and burn and it will not last forever.
There is a real demand here between two different groups I’ve noticed – First there’s all the people who are currently experiencing sky high rents and realizing it would be more financially savvy to buy a home. This is especially true since we have limited space in Pinellas County, many people are moving here and not a whole lot are leaving.
The second group are the people who are moving here from other places in the country with a higher cost of living and are enjoying the relatively lower cost of living when it comes to housing prices. Only in the past 5-10 years have we seen the boom in technology that has allowed more and more people to work remotely. This is in turn allowing many people to choose where they want to live as long as they have an internet connection. We have a past client who works for a New York based company – he has to commute a few times a month to the main office however his life is down here. His New York wages allowed him to buy a really nice home for him and his family in the Uptown neighborhood.
It’s possible that you’re reading this article a year from now and I’m totally wrong but first let’s take these Top 4 Reasons into consideration. If I’m right I’ll just need you to address me as Christrodamus.
4. This is not 2008
If you haven’t done any research into why the housing market crashed so hard in 2008, let me give you a brief explanation. Mortgages were being handed out to anyone with a pulse. My sister was 20 years old making minimum wage at a breakfast diner and they gave her a loan to buy a $260,000 home. The demand for housing became extremely inflated because pretty much anyone could buy a house with the expectation that they could refinance out of their loan before the interest rates blew up. Turns out it wasn’t easy to just refinance and many people lost their homes when they couldn’t afford their larger payments.
Now regulations are much more strict and only thoroughly qualified individuals can finance a home. Right now we are seeing a ton of people losing their jobs due to the coronavirus however this seems to be more of a hard and fast hitting wave that should only last a few months instead of a 18 month recession that is causing millions of people to lose their homes.
3. St. Pete Is A Place People Actually Want To Live Full Time
Part of the reason Florida takes a big hit when we experience a recession is because people will first sell off their vacation homes to save money and/or cash out equity. Part of what makes the Tampa Bay market different then the rest of the country is the amount of people moving to the area. There is a lot of opportunity here – it’s a progressive city that embraces entrepreneurship, green initiatives, art and local culture. This isn’t just somewhere with a beach, it’s a place where people want to put down roots and integrate with the culture. More full time people means more homes that are owner occupied and a more stable housing market.
Even though our website mainly attracts buyers from out of state, only a small percentage are buying vacation homes – I’d say less than 10%. Most people are moving here from a higher cost of living area and the people who are buying vacation homes are almost retirement age and are planning on moving here when the time is right.
2. Median Cost Of Living Is Close To The National Average
Our cost of living for housing is usually a bit lower than the national average. The current median sales price across the United States is around $250,000 whereas the median sales price in St. Petersburg is about $230,000. This is a similar concept to buying the worst house in the best neighborhood – If the cost of living for housing is currently below the national baseline, there’s more potential for upward appreciation than cities that are above the national average. With that said – If I was talking about some city in an area that wasn’t developing as rapidly as St. Pete, I probably couldn’t make the same argument. Some cities will forever stay below the national average if they are below average places to live. This area is anything but below average!
The advent and advancement of the internet has allowed people to work remotely. These people may have work that’s based out of New York, California or any other higher than average cost of living area. If you could live in an amazing tropical area and save a significant amount of your paycheck on housing, wouldn’t you? I think this will continue to become a stronger trend, especially if we come out of this coronavirus epidemic with some employers realizing that they might be better off letting their employees work remotely.
Even those people that don’t work remotely are going to have a good reason to move. Some people come here to visit and realize they could just buy a house down here and make it work. It’s still relatively affordable compared to living in many major cities. If you’ve never restarted your life in a fun city with great weather you’re missing out!
1. The Money Being Invested Into This Area
The biggest known project in this area is the redevelopment of Downtown Tampa into “Waterstreet”. I’ve seen renderings and read some articles but I didn’t realize the gravity of the development until a lady at a coffee shop started a conversation with me and I learned she was part of the project.
Bill Gates and local businessman Jeff Vinik are investing over $3 Billion dollars into Downtown Tampa to make it a more walkable and vibrant area. To give some perspective it cost $2 Billion to build the world’s tallest building The Burj Khalifa in Dubai. There are currently 16 mid-high rise buildings being constructed in the Downtown proximity, all will have ground floor retail to make this a walkable and fun area. Honestly Downtown Tampa is currently a pretty soul-less boring place so this should be exactly what they need to fulfill its potential and gain national attention. Even if you believe that Bill Gates patented the coronavirus to sell the vaccine and take over the world, he’s at least helping our local area appreciate in value. Thanks Bill!
Speaking of walkable and fun let’s talk about the original part of this article – St. Pete. Everywhere you go in Downtown St. Pete there’s a major commercial real estate project either going on or in the works. Old buildings are being demolished, some with historical value are being restored, there are investment groups with plans to keep building bigger and bigger buildings, we have a 80 million dollar pier that will be finished in June. On top of that we have 80+ acres of prime Downtown land currently taken up by the Tropicana Stadium which will eventually be repurposed – Last I heard a tech park was proposed to bring more higher paying jobs to the area.
With all that said – there’s a lot of development because there’s a real demand to live here. In 2007 a bunch of condos were built here and of course the demand for higher end real estate wasn’t there after the economy crashed so properties had to be auctioned off. The majority of these new construction buildings are luxury rental units so I think it will be the rentals that absorb most of the shock this time around, if any.
I’m honestly hoping this momentum slows down a bit but taking the simple economic principal of supply and demand into consideration, I’m not 100% sure how much of a slow down we will see. Pinellas County is a peninsula with limited land. A limited supply of anything desirable means an increase in value over time. We’re not at Miami levels of notoriety thankfully, we’re a laid back city that’s not super well known yet and a lot of people like it that way. Some of the major developers working on projects in Downtown St. Pete are from NYC and Miami so I think our humble city has a huge upward potential that will be realized in the 2020-2030 decade.
There are more reasons to move here then there are reasons to leave and it seems to only be getting better. Barring a major storm that wipes us off the map, I think St. Pete and the surrounding area are going to continue appreciating not only in financial value but also lifestyle appeal.
This area may not become the buyer’s market that some people are hoping for but I think there’s a good chance that many people may regret not buying a home here in 5-10 years once our prices start to surpass the national average.
As always feel free to reach out to us below. If you tell us about your lifestyle and budget we’ll be able to recommend some areas for you to check out. You can also send us an email at firstname.lastname@example.org. Thanks for reading and have a great day!!!!