For Lou Brown, a Realtor with a firm in Midtown St. Petersburg, it used to be unusual to represent a prospective buyer who lost their desired house in a bidding war to an investor.
Now, it’s harder to think of instances where that hasn’t happened.
“It’s very hard for regular home-buyers … to actually compete with the investors that are swinging in with their higher offers,” he said. “That’s just what time it is.”
From July through September, investors bought Tampa Bay homes at a record rate, according to data analyzed by Redfin that begins measuring in 2000. For those three months, one in four houses that sold had an investor as the buyer, for a raw total of nearly 5,000 properties.
Tampa Bay’s share of investor purchases was even higher than the record-breaking national average of 18 percent, ranking it as the seventh-hottest metro area for investors nationwide. No other state besides Florida had more than one city in the top 10. The Sunshine State had four — with Jacksonville at No. 4, Miami at No. 5 and Orlando ranking eighth.
That high concentration of investors has made things difficult for regular homebuyers using mortgages, who are easily outbid by companies paying all cash — at often more than the asking price. Some of the busiest activity is taking place in pockets of Tampa Bay that include the few remaining affordable options, pricing out long-time residents, many of them minorities.
Local renters trying to break into homeownership are harmed the most, said Sheharyar Bokhari, Redfin senior economist.
“Not only do they have to compete with other homebuyers coming from New York with a lot more money, but there’s also investors who have all cash,” he said. “For those folks this is really concerning.”
With around 20 percent growth in home prices in Tampa this past year, people are coming “out of the woodwork” to make quick money by doing flips, Bokhari said.
“Certain markets like Florida and the Sunbelt, they’ve seen a lot of people moving there in this past year, and those are areas where (investors are) most present.”
Investors started becoming bigger players in the real estate market after the housing crash that brought on the Great Recession.
But the recent spikes in home prices and rent rates plus the volatility of the stock market during the pandemic has made investing in residential real estate even more attractive, Bokhari said. Flipping and renting out homes are both lucrative propositions.
Keep up with Tampa Bay’s top headlines
Subscribe to our free DayStarter newsletter
We’ll deliver the latest news and information you need to know every weekday morning.
You’re all signed up!
Want more of our free, weekly newsletters in your inbox? Let’s get started.
Redfin defines “investors” as buyers with certain key words in their names, including “LLC,” “Trust” and “Corp.,” which aim to capture both large, institutional real estate investment corporations and mom-and-pop companies. Redfin compiled its data by combing through county property records.
Chris Lai, a Tampa Realtor with People’s Choice Realty, has noticed more investors. And they’ve recently begun behaving in new ways. For a time, those buyers would focus only on new construction. Now, they’re scooping up older homes, too, he said, and are generally interested in anything under $500,000. For these properties, investors are willing to exceed the asking price, he said.
“It’s not the old days,” Lai said. “They’re willing to go over the appraised value now. That used to never be the case but … they’re in this for the long haul.”
The high investor interest is good news for some, including property owners who are seeing their home values explode, said Michael Thompson, a Pinellas-based Realtor with Keller Williams.
“People that maybe bought their homes three to four years ago … are sitting on gold mines already,” he said. “That’s all being driven, in my opinion, by these hungry investors, cash-purchasers, first-time buyers.”
All the activity is another indicator of Tampa Bay’s meteoric rise in desirability for people flocking from around the country, Thompson said….