Tampa, Florida, is one of the fastest-growing cities in the U.S. and boasts a strong housing market that’s held up to correction pressures through this point. With a diverse economy, large tourism sector, and growing population, investing in the Tampa Bay area is a no-brainer for anyone looking for long-term growth.
Population and Labor Market
Located in the southwest portion of Central Florida along the “I-4 Corridor,” the Tampa Bay metropolitan area consists of three cities: Tampa, Clearwater, and St. Petersburg. As of 2021, the total population tracks at just over 3.2 million, making it the 18th largest metro in the country.
Below, you’ll see that Tampa has grown consistently over the last decade, except for a minor decline in 2020. This growth trend is expected to continue as more and more people move into the area.
Tampa is home to several major employers across a range of industries, including healthcare, finance, cybersecurity, and tourism. The unemployment rate is currently pegged at 2.6%, which is nearly a full percentage point lower than the national average.
Tampa also features a median age of 35.9 years old, which is within the peak household formation age range and will help prop up housing demand for the foreseeable future.
Home prices in Tampa have remained stable during the housing correction. As you can see in the graph below, YoY growth is declining rapidly, but home prices have remained at their peaks near the $350k-$375k mark. The lines on this graph aren’t so different than what we’re seeing from other strong markets in the U.S., such as Dallas and Fort Worth.
While these prices might decline in the near future due to overall growth declining, I wouldn’t expect this to be a long-term trend. I would also point out that prices in Tampa are around $60,000-$80,000 less than the national average as of April 2023. Overall, investing in Tampa remains attractive.
Rent Growth and Cash Flow
Rent growth, like sales prices, has flattened out over the past year but is up significantly since 2018. Once again, I wouldn’t expect rent prices to start falling off a cliff. It’s possible that they might decline by a couple hundred dollars, but it won’t stay that way.
As for cash flow, the map below showing the rent-to-price (RTP) ratio in each ZIP Code indicates that cash flow depends on location, but some areas can deliver good numbers. Generally, you want to find an RTP ratio close to 1% when looking for cash flow. Parts of East Tampa and North St. Petersburg are your best bets, as well as most of Clearwater. You can also find some cash flow in the suburbs north of Tampa, such as Wesley Chapel, which has grown significantly over the last two decades.
Inventory and Market Health
Inventory in the Tampa market is down 22% YoY, which has helped in keeping prices stable. The lack of supply is more in line with the levels we saw in 2019, so it’s fair to say that market conditions have/are returning to normal in some fashion. This isn’t a bad thing. If anything, the lack of volatility makes the market a bit more predictable, contrary to some of the boom markets of the pandemic that are now busting.
Furthermore, days on market (DOM) has been on the climb since May 2022 and is also back in line with pre-pandemic numbers.
Overall, Tampa is a robust market for real estate investors. It has a good price point, some decent cash flow potential, and a strong economy to support future growth. While the national housing market experiences a correction, Tampa has held up nicely. Prices have been relatively flat, and key lead indicators suggest that the market will be one of the more stable housing markets in the country over the coming months.
Kim Meredith-Hampton, an investor-friendly real estate agent in the Tampa area, says, “I recommend using a long-term rental strategy to invest in Tampa, with short and mid-term rentals also being considered when the numbers crunch out (in which case you can use the long-term strategy as a potential emergency exit).”
If you’re interested in learning more about investing in Tampa, partner with a local investor-friendly real estate agent like Kim, who can guide you through the strategies, tactics, and neighborhoods to focus on.
Here’s how to contact Kim Meredith-Hampton on Agent Finder:
- Search “Tampa, FL”
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Kim is an investor herself, managing a 3,000-unit portfolio across Central Florida and Jacksonville with extensive experience in both single and multi-family investing. She holds multiple designations within the real estate sector, including MPM® Master Property Manager NARPM and RMP® Residential Management Professional, and currently serves on the Florida Assoc. of Realtors Board of Directors and the NAR Task Force ORRA.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.