Why Is South Tampa So Expensive?

According to economics 101, ultimately a property is worth what a Buyer will pay, so we could just say that properties are more expensive in South Tampa because buyers are willing to pay more. However, why are buyers willing to pay more for a home or condo in South Tampa and what are the microeconomic forces affecting pricing? Ultimately, that comes down to the Supply and Demand curve. In general, if demand is higher than supply, prices will increase. Visa versa, if Supply is greater than Demand then prices will decline, and if there is an equilibrium, then prices will stay relatively flat. In short, prices are higher in South Tampa because Demand is higher relative to Supply. Also, keep in mind many of the micro markets in Tampa Bay move in tandem with one another, but South Tampa, as with other neighborhoods, has its own unique market dynamic.

Housing Supply:

• South Tampa is landlocked. South Tampa has gone through many eras of development but is now at the stage where there is not much land to develop. Meaning almost all residential home development opportunities are actually re-development opportunities. Meaning something has to be torn down before something can be built. Unlike other areas of Tampa Bay, you are not going to see large developments of tract homes that increase "supply." The lack of land to develop helps create "scarcity value" - meaning the value of something increases when there is not much of it, and there is not much land in South Tampa. Basically, the land is more expensive than in some other areas of Tampa Bay. Remember, the property is a depreciating asset, so in order for a home's value to appreciate, the land must appreciate more than the home is depreciating. Some other neighborhoods that are relatively land-locked: are Seminole Heights, Carrollwood, Brandon, Rocky Point, Venetian Isles, Snell Isle, Old Northeast, and Harbour Island.

Housing Demand:

• Convenience. South Tampa is conveniently located to major destinations such as Downtown Tampa, MacDill AFB, TGH, Westshore Business District, Midtown, University of Tampa, and Tampa International Airport. Its proximity to the urban core, some of the area's best restaurants and entertainment is attractive for some Buyers.
• Highly-rated public schools. (www.greatschools.org and www.hillsboroughschools.org)
• Walkability. Many of South Tampa's neighborhoods are walkable to shops, restaurants, Riverwalk, or Bayshore Boulevard.
• Waterfront. Living on a peninsula has its advantages. For those wanting the boating lifestyle, there are waterfront options on the west side of the peninsula in Westshore Yacht Club, Westshore Marina District, Sunset Park, and Beach Park, as well as on Harbour Island and Davis Islands. If it's just the views you want, then there are water views from Bayshore and Downtown Tampa.

In summary, South Tampa property is more expensive, because the value of South Tampa land is more expensive than some other Tampa Bay locations, and due to demand - Buyers are willing to pay the additional cost.

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