#29 – Market Predictions for Tampa, FL from the American Monetary Association

Tampa, FL: 12.5% Return on Investment (2011)

Moving up the Florida coast to Tampa reveals a somewhat less distressed market.  This stems from the fact that Tampa did not experience the same high-rise construction boom as Miami, and did not become oversupplied with high-cost condominiums.  As a result, the path to recovery for Tampa is approaching more quickly.  Currently, approximately 61% of listings in Tampa Bay are foreclosures.

Unfortunately, that recovery path is not likely to unfold in 2010 as values are continuing to regress back toward their underlying fundamentals.  Although Tampa did not experience the same magnitude of value escalation as markets like Miami, cash flow from rental income in Tampa is still not expected to cover the operating expenses and mortgage costs of an investment property.  This means that investors will need to absorb moderate negative cash flows until positive net value is produced by leveraged appreciation.  Our models predict that Tampa will also experience a value bottom in 2011, and experience a return to modest rates of value appreciation.

It is possible that Tampa could become a viable market for investment in the near future if the economy stabilizes and rents strengthen.  In the event that a superior price can be found for properties from distressed sellers, there is a possibility that some investments in Tampa can produce sufficient cash flows to cover the expenses until market values recover.  In the current environment, Tampa Bay is not quite at the point where it is an optimal opportunity for investors.  There are many other markets where the economics are more favorable for income properties.  Tampa Bay is certainly on the list of markets to keep watching for the ideal time to invest.  However, that time does not appear to have arrived quite yet.

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