Zillow published a report about how the prices of US residential properties changed from June to July. The report shows that the prices increased in four Florida cities. 50 largest American urban areas were covered by the survey and the value of residences dropped in 30 of them. Neither of these is located in Florida. Tampa was one of the cities where real estate prices actually grew.
The price growth in Tampa was the greatest compared to other Florida areas and cities where house prices were rising. Tampa was the fifth of 20 cities by the growth amount. Prices in Tampa – Saint Petersburg Metropolitan Area increased by 0.6%; in Jacksonville and Orlando, by 0.5%.
Nationwide prices dropped by only 0.1%. The average value of a home is currently $357,107. According to the report by Zillow, the average price of a residential property in Tampa is $389,519.
The national 30-year mortgage rate also increased along with the growing house prices in Florida. According to Freddie Mac (a government-sponsored mortgage enterprise), the new mortgage rate is 5.55%. It was 5.13% a week ago, having risen by 0.42% on August 18 through 25.
The growing mortgage rates and the economic downturn are hurting the residential property market. “The sales volume in the market of American homes is continuing to decrease, the prices are dropping, while the consumer trust remains low,” believes Sam Khater, Chief Economist at Freddie Mac. “There are, however, potential home buyers out there, despite the declining demand, who are waiting for an opportunity to return to the market.”
The rental growth is also beginning to slow down but rentals are still slightly higher than before the COVID-19 pandemic. “The current slowdown in the residential property market is caused by the extreme price growth in the beginning and in the middle of the pandemic that coincided with the sudden hike of mortgage rates. This combination quickly weakened Americans’ purchasing power,” the Zillow report says.
Higher cost of residences and higher mortgage rates are pushing the buyers out of the market. They are now facing lower competition, which gives them more time to find a home. Residential properties remain in the market for a longer time, so sellers are starting to reduce the prices.