Why Are St Pete Homes More Expensive Than Tampa Homes?

19

DECEMBER, 2018

Tampa
Bay
Real Estate

If you take a look at the Tampa Bay area, you will notice a trend:  Homes in PInellas county are generally more expensive than similar sized homes in Hillsborough county.  why is that?

The reason is actually quite simple.  It’s where more people want to live!

Now, this isn’t to downtalk Tampa or Hillsborough County.  Nothing of the sort.  I lived in Tampa, Brandon, and Plant City for most of my life.  I love the Hillsborough River in Tampa, Ybor City is still as amazing as it has been for the last 30 years, and Hillsborough county certainly has more people as well as a richer history if we’re being completely honest.

The main thing Hillsborough has that Pinellas County doesnt, is LAND.

House Currently Under Construction

Pinellas County, which includes the cities of Clearwater, St Petersburg, Gulfport, Safety Harbor, and Tarpon Springs, is the most densely populated county in the state of Florida.  Most people would assume it would be Miami-Dade or Browards County, but no!  It’s Pinellas County in lovely Tampa Bay Florida!

There are 3,347 people per square mile here.  Crazy, right!  Broward, the #2 most dense county in Florida is only half as dense at 1472 people per square mile.

So with that density comes demand.  And that density comes from another fact:  Pinellas county is 95% built.  There is no large tracts of vacant land to build new homes, townhomes, and communities.  Which means the only options are to buy a pre-existing home and live it, or knock it down an build  a new home.  A pricey proposition either way.

So simple supply and demand is the main undercurrent for why homes in say St Petersburg are generally speaking 10%-20% more expensive than the same home in Tampa.  

In Hillsborough County, there are still large scale new construction projects going on, mostly found in the far north of the county on the Pasco border, and in the southeast section of the county, south of the Alafia River. 

This new construction does alleviate some of the pressure off of Tampa’s city center, resulting in lower home prices inside the city itself.  After all, many people would rather have a brand new home with larger a larger lot and a garage than a smaller lot and an older home that may or may not have been taken care of properly.

 

“simple supply and demand is the main undercurrent for why homes in say St Petersburg are generally speaking 10%-20% more expensive than the same home in Tampa. “

Let’s look at and compare actual numbers.

Currently, in October 2018, the average home price single-family homes for Hillsborough County is $286,488.

By comparison,single-family homes in Pinellas County had a average home price of $321,704, a 12% difference!

Now of course average home price can be skewed by factors such as inventory on the market.  Some people believe median home price is a better indicator.  In this case, that is $259,900 for Pinellas and $244,190 for Hillsborough.  But keep in mind that median is not an average, it is just the middle point for all homes sold in a given month.  

In layman’s terms, the median home price is the point at which half of homes sold cost more and half of homes cost less.

 

Some additional reasons that Pinellas County costs more than Hillsborough are because of its waterfront, and it’s proximity to local beaches.

If you ask anyone from up north or the midwest what they know about Tampa, they’ll probably mention “Beaches!”.  But those of us who live in Tampa Bay know that the actual gulf beaches are in Pinellas County.  

Sure, there are some beaches on Tampa Bay itself, notably Picnic Island, Cypress Point Park, and Ben T Davis Beach up on the Courtney Campbell Causeway.  But when most people think of beaches, they think of wide white crystal sands, seashells, and rolling surf crashing against the land.  

Which you’d be hard pressed to find in Tampa Bay, unless there’s a storm coming.

And since most people move to Tampa Bay from outside of the area, they naturally want to gravitate towards the beaches.  After all, it’s what Florida is known for!  I mean, would you move to Colorado just to live near some sand dunes?  Of course not, you’d naturally want to be close to the Rockies!

So this inherent need for people to be close to bodies of water naturally draws people to places like Indian Rocks Beach or Saint Petersburg, with the side effect of slowly applying upward pressure on housing prices.

“By comparison,single-family homes in Pinellas County had a average home price of $321,704, a 12% difference! “

And what about just how cool downtown St Petersburg has become in the last 15 years?  

It has grown from a quiet, sleepy corner of Florida to a hustling, bustling downtown with people out at all hours of the day and all days of the week, taking in sights, sounds and shopping.  You’d be hard pressed to find a type of cuisine not represented somewhere in St Pete, and while we may not be known for our discotheques there are plenty of pubs, lounges, breweries, and distilleries that you will never lack for something to do.

Matter of fact there is so much to do in the area, I host a show and mobile app called Great Things Tampa Bay to help people navigate the myriad of entertainment options available!

There’s art galleries, antique stores, vintage clothings, smash rooms, puzzle rooms, rock climbing, bicycling, running, board game and video game groups, cigars, pipes, shoes….. the only thing I can think of that St Pete doesn’t have is the aforementioned dance clubs.  Oh, lighted golf driving ranges.  We don’t have any of those, because as I mentioned, land is at a premium.

So this cultural beacon in the area, which is much different than Tampa’s, has begun attracting a tremendous amount of people to the area.  Naturally this raises home prices as well as rents.

Beautifully constructed home with a beach color scheme.

And finally, there are the market forces.

Interest rates at still very low historically, and loans are relatively easy to get.  Unlike 2009, when lenders were reluctant to lend even to people with flawless credit, mortgages are fairly given once a buyer displays that are at small to medium risk to defaulting on the loan.

This influx of easier cash naturally allows for higher home prices.  After all, what’s the difference between a $240,000 mortgage and a $260,000 one?  The answer is….. about $100/month.  Which most people are willing to pay to get the home they want.

In addition, there is the additional pressure from overseas.  Thanks to the before mentioned increase in St Pete’s status as a hip city with good things happening, it naturally attracts more attention from overseas buyers.  Perhaps they are not interested in living in Miami, but want the same sort of tropical experience.  They then naturally find St Petersburg, because hey, it’s one of the largest cities on or near the coast of Florida.

Foreign buyers in real estate are many times cash buyers, and they are happy to purchase second or even third homes to relax or leisure in.  Many will move here full time, but not all.  And honestly, that’s great!  Florida, and St Pete in particular, wouldn’t even exist if it were not for tourism.  The only reason St Pete became a city was because the rail line was extended here from Tampa, becoming the Sunshine City and world renowned for Spring Training of such baseball stars as Babe Ruth.

So why are homes in Hillsborough County less expensive than homes in PInellas County?

It really comes down to simple supply and demand.  

Hillsborough County, though they have more people, also have more houses, with more and more being built every day.  This boosts supply, keeping prices in check.  More people want to move to Pinellas County to be close to the beautiful beaches, which when coupled with no additional land for development in Pinellas county leads to naturally rising and higher prices.