5 Markets Where Rising Inventory is Helping Buyers: Tampa Leads the Way

As the real estate landscape continues to evolve, affordability has been a persistent challenge across much of the country. Despite an increase in housing supply, many areas still struggle with high prices. However, a few key markets, including Tampa, are beginning to show signs of improvement for prospective buyers.

The National Affordability Landscape

Recent years have seen worsening affordability in the U.S. real estate market, contributing to a slowdown in buyer activity. Even with an uptick in housing supply, the affordability issue persisted in many regions. However, recent research by First American indicates a shift, with some markets becoming more accessible.

Uneven Inventory Growth: The Driving Factor

First American's research highlights that affordability improved in only five of the 50 largest U.S. markets in June. This uneven growth in housing inventory is the primary factor. While more than a dozen markets experienced below-average inventory growth and decreasing affordability, five markets saw improvements, driven by a faster increase in housing supply.

National Trends: A Gradual Move Toward Balance

Redfin's latest report shows a gradual move towards a balanced market, with the typical U.S. homebuyer's monthly payment decreasing to $2,671 – the lowest in four months. However, affordability remains a significant challenge, with payments still up 4.6% year-over-year.

Impact of Potential Interest Rate Cuts

Odeta Kushi, deputy chief economist at First American, suggests that a Federal Reserve rate cut in September could lead to lower mortgage rates, modestly improving affordability. However, real estate markets are inherently local, and the impact will vary by region.

Spotlight on Tampa and Other Improving Markets

Among the largest 50 markets, Tampa has shown the most significant improvement. With inventory increasing by 62% year-over-year in June, affordability improved by 5%, according to First American's index. Mark Fleming, chief economist at First American, notes, "The faster housing supply increases, the more affordability improves, and the strength of a seller's market wanes."

Other markets experiencing similar trends include:

• Denver: 28% inventory growth, 7% improvement in affordability
• Portland, Oregon: 20% inventory growth, 3% improvement in affordability
• Raleigh, North Carolina: 30% inventory growth, 2% improvement in affordability
• Austin, Texas: Despite a slowdown in inventory growth, affordability has improved due to previously high pandemic price gains.

The Challenging Markets: Affordability Still Declining

Conversely, some markets are seeing slower inventory growth and further declines in affordability, particularly in the Northeast and Midwest. Notable examples include:

• Providence, Rhode Island: 10% more inventory, 12% less affordable
• Cincinnati, Ohio: 13% more inventory, 11% less affordable
• Buffalo, New York: 3% more inventory, 10% less affordable

Outliers: Rising Inventory Without Improved Affordability

Interestingly, five markets have seen a surge in inventory without resulting in greater affordability due to intense demand. Leading this category is Memphis, where the market is 13% less affordable than a year ago despite a 26% increase in inventory. Seattle also stands out, with a market 9% less affordable despite 25% inventory growth.

Conclusion

As we navigate the ever-changing real estate market, it's clear that inventory growth plays a crucial role in improving affordability. While national trends show some promise, local dynamics will ultimately dictate the balance of supply and demand. For buyers in markets like Tampa, increased inventory offers a beacon of hope amidst ongoing affordability challenges.

Ready to explore your options in Tampa's improving market? Contact Robert O'Connor today for expert guidance and personalized service. Let's make your real estate dreams a reality!

Call Robert at (813)928-6745 or email [email protected]