Comprehensive Housing Market Analysis for Tampa-St ...

C O M P R E H E N S I V E H O U S I N G M A R K E T A N A LY S I S

Tampa-St. Petersburg-Clearwater, Florida

U.S. Department of Housing and Urban Development Office of Policy Development and Research As of March 1, 2018

Summary

Housing Market Area

Gulf of Mexico

Citrus Hernando

Sumter

Lake

Pasco

Hillsborough Polk

Pinellas

Manatee

Hardee

The Tampa-St. Petersburg-Clearwater Housing Market Area (hereafter, Tampa HMA) is coterminous with the TampaSt. Petersburg-Clearwater, FL Metropol itan Statistical Area and encompasses the Tampa Bay region along the Gulf Coast of Florida. The HMA is a center for financial and businesses services and a destination for retirees. For purposes of this analysis, the HMA is divided into two submarkets: (1) the Central Counties submarket, which includes Hillsborough and Pinellas Counties and is home to MacDill Air Force Base (AFB) and the University of South Florida (USF); and (2) the Northern Counties submarket, which includes Hernando and Pasco Counties.

Economy

Economic conditions in the Tampa HMA have strengthened since 2011, with nonfarm payrolls surpassing the prerecession high in 2015. During the 12 months ending February 2018, nonfarm payrolls increased by 25,000 jobs, or 1.9 percent, slowing from an average increase of 31,500 jobs, or 2.7 percent, annually from 2011 through 2016. The largest sector, professional and business services, has led growth since 2014 and was up 5,800 jobs, or 2.5 percent, during the past 12 months. Nonfarm payrolls are expected to grow an average of 1.6 percent a year during the 3-year forecast period, led by expansions in the business services, tourism, and healthcare industries.

Sales Market

The sales housing market in the HMA is balanced, with an estimated vacancy rate of 1.7 percent, down from 3.5

percent in April 2010. During the next 3 years, demand is estimated for 39,700 new homes, with approximately 70 percent of the demand expected in the Central Counties submarket (Table 1). The 3,925 homes under construction are expected to satisfy a portion of the forecast demand during the first year of the forecast period.

Rental Market

Rental housing market conditions in the HMA are balanced, with an estimated overall vacancy rate of 6.8 percent, down from 13.1 percent in April 2010. During the next 3 years, demand is expected for 20,425 new market-rate rental units (Table 1), with approximately 80 percent of the demand expected in the Central Counties submarket. The 8,125 units currently under construction are expected to satisfy forecast demand during the first year and a portion of the second year of the forecast period.

Market Details

Economic Conditions...................................................................... 2 Population and Households............................................................ 6 Housing Market Trends................................................................... 9 Data Profiles.................................................................................. 20

Summary Continued

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Table 1. Housing Demand in the Tampa HMA* During the Forecast Period

Tampa HMA*

Central Counties Submarket

Northern Counties Submarket

Sales Units

Rental Units

Sales Units

Rental Units

Sales Units

Rental Units

Total demand

39,700 20,425 27,150 16,450 12,550 3,975

Under construction 3,925

8,125

2,625

6,650

1,300

1,475

* Tampa-St. Petersburg-Clearwater HMA.

Notes: Total demand represents estimated production necessary to achieve a balanced market at the end of the forecast period. Units under construction as of March 1, 2018. The forecast period is March 1, 2018, to March 1, 2021.

Source: Estimates by analyst

Economic Conditions

Ta m p a - S t . P e t e r s b u r g - C l e a r w a t e r, F L ? C O M P R E H E N S I V E H O U S I N G M A R K E T A N A LY S I S

Economic conditions in the Tampa HMA continue to strengthen, adding jobs each year since 2011 and exceeding prerecessionary payroll levels during 2015. The HMA is both a retirement destination and a center for business services that mainly support larger national busin esses in the finance, insurance, and banking industries. The finance, business services, and tourism industries in the HMA generally depend on providing services to national and international clients, causing industry and overall HMA growth to fluctuate with national economic conditions. The HMA also experienced strong growth and decline in the construction subsector during the 2000s, as access to home loans from national financial institutions eased in the early to mid2000s and tightened in the late 2000s. Defense, university education, and healthcare are also major industries in the HMA but tend to be less affected by national economic conditions.

In the early 2000s, the HMA economy contracted partially because of the national recession in 2001. From 2001 through 2002, nonfarm payrolls declined by an average of 9,400 jobs,

or 0.8 percent, annually. Jobs in the professional and business services sector declined by 4,400 jobs, or 2.7 percent, annually, accounting for nearly one-half of the jobs lost.

In the mid-2000s, national economic expansion combined with an increase in housing construction, due to rela tively easy access to home loans, supported growth. From 2003 through 2006, nonfarm payrolls increased by an average of 25,800 jobs a year, or 2.2 percent, annually. The mining, logging, and construction sector expanded by an average of 6,100 jobs, or 7.7 percent, annually, accounting for nearly one-fourth of job growth. Jobs in the professional and business services and the financial activities sectors increased by 9,700 and 2,600 jobs a year, or 5.6 and 2.6 percent, respectively, and combined accounted for nearly one-half of total jobs added. The education and health services sector, a sector that has added jobs every year since 2000 regardless of economic conditions in the HMA, expanded by an average of 3,900 jobs, or 2.5 percent, annually from 2003 through 2006, accounting for 15 percent of growth.

Economic Conditions Continued

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Labor force and resident employment Unemployment rate

From 2007 through 2010, jobs declined by an average of 31,600, or 2.7 percent, annually, reaching a low of 1.11 million jobs during 2010, approximately the same as the number of jobs in the HMA during 1999. Nearly every sector, except the education and health services and the government sectors lost jobs. The mining, logging, and construction sector, affected by reduced home construction because of tighten ing credit restrictions on home loans, declined by 10,400 jobs, or 13.5 perc ent, annually, accounting for approximately one-third of jobs lost. The professional and business services and the financial activities sectors declined by 5,900 and

Table 2. 12-Month Average Nonfarm Payroll Jobs in the Tampa HMA,* by Sector

Total nonfarm payroll jobs Goods-producing sectors Mining, logging, & construction Manufacturing Service-providing sectors Wholesale & retail trade Transportation & utilities Information Financial activities Professional & business services Education & health services Leisure & hospitality Other services Government

12 Months Ending

February February

2017

2018

1,300,900 1,325,900

136,400 140,400 71,300 73,700

65,100 66,700 1,164,500 1,185,500

217,400 217,200

30,500 25,500

30,700 24,800

108,300 113,100 230,900 236,700

200,800 206,400

150,000 154,300 45,200 45,800

155,900 156,400

Absolute Change

25,000 4,000 2,400 1,600

21,000 ? 200 200 ? 700 4,800 5,800 5,600 4,300 600 500

Percent Change

1.9 2.9 3.4 2.5 1.8 ? 0.1 0.7 ? 2.7 4.4 2.5 2.8 2.9 1.3 0.3

* Tampa-St. Petersburg-Clearwater HMA.

Notes: Numbers may not add to totals because of rounding. Based on 12-month averages through February 2017 and February 2018.

Source: U.S. Bureau of Labor Statistics

Figure 1. T rends in Labor Force, Resident Employment, and Unemployment Rate in the Tampa HMA,* 2000 Through 2017

1,620,000

12.0

1,520,000

10.0

1,420,000

8.0

1,320,000

6.0

1,220,000

4.0

1,120,000

2.0

1,020,000

0.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Labor force

Resident employment

Unemployment rate

* Tampa-St. Petersburg-Clearwater HMA. Source: U.S. Bureau of Labor Statistics

3,700 jobs a year, or 3.1 and 3.8 perc ent, respectively, and combined accounted for 30 percent of net job loss. Jobs in the wholesale and retail trade sector, affected by reduced spending because of the declines in other sectors, fell by an average of 5,400 jobs, or 2.7 percent, annually, accounting for 17 percent of job loss.

Nonfarm payrolls in the HMA have increased since 2011 by an average of 30,700 jobs, or 2.6 percent, annually. All sectors added jobs, except the information sector, which declined by an average of 100 jobs, or 0.5 percent, annually. The mining, logging, and construction, the professional and business services, the leisure and hospitality, and the financial activities sectors have had the highest rates of growth during the expansion, rising 4.8, 4.4, 3.4, and 3.3 percent, respec tively, since 2011. During the 12 months ending February 2018, payrolls grew by 25,000 jobs, or 1.9 percent (Table 2). Unemployment averaged 3.8 percent during the 12 months ending February 2018, down from 4.5 percent during the previous 12 months and nearing the recent low of 3.5 percent during 2006 (Figure 1).

Job growth in the professional and businesses services, the largest sector in the HMA (Figure 2), and the financial activities sectors accounted for nearly 40 percent of postrecession job growth. From 2011 through 2016, payrolls in these sectors rose by 9,200 and 3,000 jobs, or 4.7 and 3.1 percent, respectively. During the past 12 months, job growth in these sectors was 5,800 and 4,800, or 2.5 and 4.4 percent, respectively. Overall, jobs in the finance and insurance industry are 1.5 times more concentrated in the HMA com pared with the nation (Bureau of Labor and Statistics, location quotient, 2017).

Economic Conditions Continued

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Figure 2. Current Nonfarm Payroll Jobs in the Tampa HMA,* by Sector

Government 11.8% Other services 3.5%

Mining, logging, & construction 5.6% Manufacturing 5.0%

Leisure & hospitality 11.6%

Wholesale & retail trade 16.4%

Education & health services 15.6%

Transportation & utilities 2.3% Information 1.9%

Financial activities 8.5%

Professional & business services 17.9%

* Tampa-St. Petersburg-Clearwater HMA. Note: Based on 12-month averages through February 2018. Source: U.S. Bureau of Labor Statistics

Recent expansions announced during 2016 and 2017 tend to be in business services industries. Companies that announced expansions have begun hiring and are expected to completely fulfill the job announcements during the next 3 years. Amgen Inc. is expected to add 450 jobs in information systems and human resources. Citigroup Inc. is expected to add more than 1,100 jobs in accounting, legal, and operations support, and USAA is expected to add 1,200 jobs in insurance customer service. These expansions are expected to support further growth in the professional and businesses services and the financial activities sectors during the next 3 years.

Jobs added in the leisure and hospitality sector also contributed to the current period of expansion. From 2011 through 2016, payrolls in this sector increased by an average of 4,600 jobs, or 3.5 percent, annually. During the 12 months ending February 2018, payrolls expanded by 4,300, or 2.9 percent. Tourist attractions, including beaches, baseball spring training, theme parks, and museums, attracted an estimated 30 million visitors to the HMA and $9 billion in visitor spending in 2016 (Visit Tampa Bay, Visit St. Petersburg/Clearwater). The

$40 million expansion of the New York Yankees spring training stadium in Tampa that opened in 2017 and TripAdvisor naming Clearwater Beach the "Best Beach in the U.S." in 2016 and 2018 have brought national recognition to existing tourist attractions in the HMA, contributing to recent growth. The opening of the James Museum of Western and Wildlife Art in spring 2018, which will join the three existing art museums in downtown St. Petersburg, is expected to further the HMA's reputation as a center for art. The new museum and national recognition of existing tourist destinations are expected to contribute to additional growth in the leisure and hospitality sector during the next 3 years.

The education and health services sector has added jobs each year since 2000 and has grown the most of any sector since 2000 (Figure 3). Jobs in the sector grew during the 2010s but at a slightly slower rate compared with expansion during the late 2000s, when very few other sectors were adding jobs. From 2011 through 2016, payrolls in the education and health services sector increased by an av- erage of 3,600 jobs, or 1.9 percent, compared with an average increase of

Economic Conditions Continued

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Figure 3. Sector Growth in the Tampa HMA,* Percentage Change, 2000 to Current

Total nonfarm payroll jobs Goods-producing sectors Mining, logging, & construction Manufacturing Service-providing sectors

Wholesale & retail trade

Transportation & utilities

Information Financial activities Professional & business services Education & health services Leisure & hospitality Other services Government

? 40

? 30 ? 20

? 10

0

10

20

30

40

50

* Tampa-St. Petersburg-Clearwater HMA. Note: Current is based on 12-month averages through February 2018. Source: U.S. Bureau of Labor Statistics

4,100 jobs, or 2.5 percent, from 2006 through 2010. During the past 12 months, sector payrolls expanded by 5,600 jobs, or 2.8 percent. Seniors age 65 and over are a group that spends the most per person on average for healthcare (Centers for Medicare and Medicaid Services) and comprise nearly 20 percent of the HMA population compared with 15 percent nationwide (2016 American Community Survey [ACS] 1-year data). The 65-and-over age cohort grew faster than the overall population in the HMA, contributing to growth in the sector. The USF Health Morsani College of Medicine and Heart Institute, part of a $3 billion Water Street Development in downtown Tampa, is under construction and expected to open during the next 3 years, contributing to continued expansion in the education and health services sector. No job announcements were made regarding the healthcare facility expansion.

The government sector is a notable source of employment stability in the HMA despite slower overall growth compared with other sectors in the HMA. From 2011 through 2016, gov ernment sector payrolls increased by an average of 100 jobs, or 0.1 percent, annually. During the past 12 months, the pace of growth rose to 500 jobs, or 0.3 percent. The HMA is home to USF, with 48,500 students and more than 15,000 employees during the 2017?2018 academic year at the Tampa and St. Petersburg c ampuses (USF Institutional Research & Ana lytics). The university was awarded a record high $460 million in grants and contracts during 2016. An expansion of the USF-St. Petersburg campus is planned, including additional student housing and academic buildings, in anticipation of up to 5,000 additional students at the campus by 2025. Mac Dill AFB employs 18,800 people on or near the base in Tampa, including 15,100 military personnel and 3,700

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