St Petersburg FL Housing Market

St Petersburg FL Housing Market cover picture shows a modern home in the background.

St Petersburg FL Housing Market:  The Red-Hot St. Petersburg Housing Market

Introduction The St. Petersburg, Florida housing market has been sizzling over the past year, with home prices and sales surging to new highs. However, in the backdrop looms the possibility of rising interest rates in 2024 which could upend the market’s stellar run. This article analyzes recent trends and developments to determine what the future holds for St. Petersburg real estate.

St Petersburg FL Housing Market:  January 2024 Statistics

Latest Market Statistics – January 2024 The median sold price of homes in St. Petersburg in January 2024 hit $430,430, up 8.7% from $396,000 the previous January according to the latest housing data. On a price per square foot basis, homes sold for $336, again demonstrating noteworthy year-over-year appreciation. These statistics underscore the continued strong price growth within the local housing market amidst high demand and low inventory.

Home Prices and Sales For starters, St. Petersburg home values have increased steadily, up 3.2% year-over-year to an average of $372,493 as of December 2023 according to Zillow. This consistent price appreciation reflects strong and growing demand for housing in the area even as national data shows signs of a slowing housing market.

St Petersburg FL Housing Market:  Mortgage Rates

Meanwhile, rock-bottom mortgage rates have powered immense home buying demand. Specifically, the median sale price in November hit $431,000, up 11.9% from the previous year according to Redfin. Sale prices have handily exceeded asking prices as well, with 10.6% of homes selling above list price. This bidding war situation has been going on for over a year now, with no sign of abating. Cash buyers and investors have been especially active. No wonder competition has been fierce, with the average home garnering 4 offers and selling in just 25 days. This red-hot seller’s market has left many buyers frustrated.

St Petersburg FL Housing Market:  Inventory and New Listings

At the same time, buyers hunting for homes in St. Petersburg face extremely limited options. There are only 1,760 active listings in the market according to data compiled on December 31, 2023. Inventory has hovered around 2 months’ supply, classified as a seller’s market. And while new listings in December ticked up to 493, overall supply remains low. Builders have struggled to construct enough new housing units to satisfy demand. This persistent supply-demand imbalance has bid up prices rapidly to the detriment of buyers. Until more homes hit the market, buyers will continue struggling with few choices and inflated asking prices.

St Petersburg FL Housing Market:  Market Dynamics and Competition

The data reveals St. Petersburg as a seller’s market currently. Specifically, 96.8% of homes are selling at or above asking price as of November 2023, an indicator of strong demand. And while 37.7% of sellers have dropped prices, this figure still marks a year-over-year decline and is relatively average. With homes typically pending in 24 days and many attracting multiple competitive offers often over asking price, buyers must act decisively on properties that meet their criteria or risk being shut out. Investors paying cash have made it especially difficult for regular homebuyers to compete.

St Petersburg FL Housing Market:  St Petersburg Real Estate Forecast for 2024

Given the market’s remarkable run over the past year, the big question is whether it could crash in 2024. Much hinges on interest rate moves by the Federal Reserve. If rates spike higher to combat inflation, it would dampen buyer demand and price growth. In a sense, higher rates could provide a moderating force on the heated housing market. Meanwhile, an economic downturn leading to widespread job losses would also hit the housing market.

However, market observers don’t expect a 2008-style crash despite potential slowing. Factors like St. Petersburg’s surging population and steady economic growth with unemployment near record lows underpin fundamental housing demand. Furthermore, The market is not oversupplied with housing either currently. And with homes selling slightly below list price at present, there are no major warning signs of overheating or bubbles brewing as of now. Barring an unforeseen shock, conditions seem ripe for at least a stable if not slightly appreciating market.

St Petersburg FL Housing Market:  St Petersburg Rental Market Analysis

Beyond the traditional sales market, St. Petersburg presents attractive investment opportunities for rental property owners catering to the strong demand from both residents and tourists. Currently the rental property market harbors approximately 108,000 units. With high home prices pushing more people into rentals, occupancy rates average around 90%. Rents have climbed 5-10% annually over the past few years as well, now averaging roughly $1,700.

Investors can capitalize on this insatiable demand, especially for single-family rentals which command even higher rents near $2,000 per month. New construction has lagged behind population growth, and St. Petersburg’s older housing stock means increasing renovations demand. Despite high potential returns, finding discounted properties available for purchase remains the biggest challenge.

St Petersburg FL Housing Market:  Tips for Buyers and Sellers Tips for Buyers and Sellers as the Market Shifts

Tips for Buyers and Sellers For both buyers and sellers preparing to enter the market in 2024, having an experienced local real estate agent to provide on-the-ground intelligence and recommendations can prove invaluable for navigating the tricky dynamics.

Buyers should get pre-approved for a mortgage, be ready to act quickly with a strong offer, and have some contingency plans in case they are outbid. Flexibility on move-in timeline or leasebacks may help win a bidding war. Additionally, Sellers aiming to capitalize on red-hot demand should strategically price their home slightly below market value, prepare the property to show in the best possible light, and expect a quick sales process with potential bidding wars.

St Petersburg FL Housing Market:  Conclusion

In conclusion, prospects remain very favorable for St. Petersburg real estate in 2024 provided lending standards do not tighten considerably and the economy avoids sharp deceleration. While price and sales growth could moderate moving forward, the market is on strong footing underpinned by positive demographic and economic trends. Inventory shortages, strong demand, and investor appetite should continue buoying prices higher. Savvy buyers and investors may wish to capitalize on opportunities before higher mortgage rates and more balanced conditions potentially arrive in 2025-2026. Either way, the sun shines brightly on the St. Petersburg housing market’s future.

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About the Author
Rob Johnson
Realtor, St. Petersburg FL