Thursday, January 21, 2010

Tallahassee Real Estate Market Update-things are looking good!

Despite the doom and gloom that everyone is hearing about in the news these days about real estate, there are some areas throughout the country where real estate markets are improving. By nature, real estate markets are unique from city to city and from town to town. With that in mind, you must realize that the doom and gloom you hear in the media about the real estate cannot be true for everywhere. In fact a perfect example is Tallahassee's Real Estate market. The real estate market in Tallahassee seems to be doing pretty well.

As a REALTOR, I have access to market statistics for Real Estate here in Tallahassee that are provided to me through the Tallahassee Board of Realtors. This past week I have taken the liberty of doing some research to find out which direction our local real estate market is headed in. In my research, I divided up houses both by area and by price range. I divided up Tallahassee into 4 quadrants, Northeast, Southeast, Northwest and Southwest. The price ranges I used were from $0-$125K, $125K-$250K, $250K-$375K, $375K-$550K and $550+. I compared market statistics on houses in each of these price ranges and in each area for the last quarter of 2008 to the houses in each price range and in each area for the last quarter of 2009.

As a whole, the number of houses on the market in Tallahassee has decreased from last year, and the number of homes sold has increased from last year. With housing inventory down and sales up, this is a strong indicator that demand for homes in Tallahassee is increasing, and our real estate market is on it's way back to being healthy. Here are a few examples to illustrate my point. On the northeast side of town for properties under $125,000, the ratio of homes sold over number of homes listed for sale on the market increased 29% in the fourth quarter of 2009 compared to the fourth quarter of 2008. Another example can be seen for homes priced between $125,000 and $250,000 located on the southeast side of Tallahassee where there was a 45% increase in the ratio of homes sold over the number of homes listed for sale on the market. The increase in this ratio of homes sold compared to homes listed for sale has taken place all throughout Tallahassee. For houses above $550,000 the increase in this ratio for 2009 is smaller compared to the increase in this ratio for homes in the lower price ranges. Again the increase in the ratio of homes sold over homes on the market for sale means that more homes are selling and inventory of homes is decreasing. This is a good sign of increasing demand which is what ultimately leads to home values increasing.

As a whole, Tallahassee has seen a small reduction in the value of homes in the last year, but the losses in value are small and it appears that prices are bottoming out. In some areas of Tallahassee though and in certain price ranges, home values are actually increasing! Yes, you read that right, increasing. For instance,  for homes priced between $250,000 and $375,000 located on the northeast side of town, home prices were 1.3% higher on average in the last quarter of 2009 compared to the last quarter of 2008. Another example are homes located in northwest Tallahassee that are in the price range of $125,000 to $250,000. In the last year, these homes have seen an increase in value of 1.5%. There are also a couple other examples of homes in certain price ranges and in certain areas where small gains in value have occured in the last year. In all of the other areas and price ranges, prices have either remained flat or have experienced small decreases in value. This is a far cry from what the media is telling us though.

The last value that I looked at when doing my market research was the average days on the market for homes before they sold. This is another number you can look at to assess what demand is like.  When this number is high, usually it means demand is weak, and when this number is low it usually means demand is high. Overall the numbers show that about half of the subsets ( homes in certain areas and certain price ranges) of homes throughout Tallahassee have seen decreases in the number of days in takes to sell a home, and other half of the subsets have seen increases in the number of days that it has taken to sell a home.  Here are a few examples.  On the Southwest side of town for homes priced from $125,000-$250,000 the average number of days on the market before a home sold decreased by 74days in the 4th quarter of 2009 compared to the 4th quarter of 2008.    For homes priced between $375,000-$500,000 on the northeast side of town this number increased by 39 days in 2009, and for homes priced between $0 and $125,000 on the northwest side of town this number increased by 39 days as well. 

While Tallahassee's Real Estate market is still not as good as we would like it to be, it is headed towards recovery.  Although home prices overall are slightly down, and the number of days it takes to sell a home is about the same as last year, the number of homes sold has increased and the amount of homes listed for sale has decreased.  This shows that demand for homes is picking up and the supply of homes is going down which means it should not be too long before we see home prices starting to increase overall throughout Tallahassee.  As mentioned before there are homes in some areas in certain price ranges that are already increasing in value.  With the tax credit deadline for first time and repeat homebuyers coming up at the end of April, we can expect to see a surge of demand for homes in the next couple of months.   Because of this, right now might be a great time to list your home in Tallahassee for sale if you are thinking about doing so.