The Federal Reserve raised interest rates earlier this month for the first time in more than three years, aiming to cool inflation as the cost of living keeps climbing. The effects are now showing up in Tampa Bay real estate, where borrowing costs are up for residential and commercial buyers, and prices remain elevated.
The average 30-year fixed mortgage now sits between 7 and 7.25 percent. Sellers say that is making deals hard to close.
Ben Mallah, a longtime investor whose holdings include hotels, restaurants, retail and apartment buildings, owns significant property at Johns Pass in Madeira Beach. He described a market where buyers are scarce and those who remain are hunting for bargains.
“Finding a buyer today is very difficult; the buyers that are out there are looking for the fire sale,” he said.
Mallah said sellers should no longer expect the prices they could have commanded a couple of years ago. He said 7 percent is too steep for a homeowner who needs to buy, and that stabilizing rates near 5 percent would settle the market. He also said energy costs need to come back down, along with rates, before the market matches the underlying economy.
St. Petersburg real estate agent Liane Jamason said some active shoppers have stepped back in recent weeks because of the higher rates. She argued, however, that buyers willing to move now may benefit.
Jamason pointed to 2020 through 2022, when rates ran between 2 and 3 percent, and inventory was extremely tight. Buyers, she said, bid against one another, paying $100,000 over asking and waiving contingencies. One buyer even offered a seller Disney tickets to win the deal. With less competition today, she said, buyers could find lower prices.
Mallah noted that real estate always moves in cycles, and said opportunities remain for investors. Banks, he said, are now more willing to negotiate loan rates. His bottom line for businesses and homeowners alike was that the market needs stability, with rates settling at a level people can manage.
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