3rd Quarter 2013 Tallahassee Residential Real Estate Market Snapshot And Year Over Year Market Statistics.
Well Tallahassee's real estate market continues to improve in the 3rd quarter of 2013 when compared to the same time a year earlier. We saw overall improvements in all of the metrics from the 3rd quarter of 2012 to the 3rd quarter of 2013. Based on the improvements it seems that Tallahassee's local real estate market is recovering from the real estate bust, and is returning to more of a historically traditional and balanced real estate market.
First of all, the number of residential properties listed for sale in Tallahassee increased by 26.2% year over year in the 3rd quarter of 2013. This is great news because in the last year and a half or so we have had a shortage of housing inventory making it hard for homebuyers to find a home that fits their needs. The shortage of housing inventory has led to many bidding situations on properties, so this recent increase housing inventory is good news for homebuyers as it will provide them more homes to choose from.
In addition to the increase in the number of properties listed for sale, we also saw a whopping 29.3% year over year increase in the number of properties sold in Tallahassee in the 3rd quarter of this year. The increase in home sales has largely been a product of an improving economy in the state of Florida, affordable home prices and low interest rates on home loans. Also lenders have very slowly been relaxing a little bit on lending standards making it a little bit easier for buyers to obtain home loans. I emphasize a little bit because lending standards are still more strict compared to historical norms. The overall increase in home sales is a sign of an improving local real estate market though.
The year over year average sales price of residential property also went up in Tallahassee in the 3rd quarter of this year. The increase in the average sales price was only a modest 3.03%, but that falls in line with the rate that homes have historically appreciated by. This rate of increase seems to be a sustainable rate of increase, so this is one sign that we are back to more historically traditional real estate market conditions. This should spur more buying and selling of property as more people regain the confidence that real estate is again a safe investment.
Another sign that the real estate market is improving here in Tallahassee is that the sale price/list price ratio for residential real estate increased in the 3rd quarter of 2013. This ratio measures what the average home sells for compared to what it's listed for sale at. In the 3rd quarter of 2013 the average home sold for 96.61% of what it was listed for sale at. That is up from 96.01% in the 3rd quarter of 2012. The increase in the average sale price/list price ratio indicates that there is healthy buyer demand for residential properties, and that people selling residential properties are listing their property for sale at close to what it's market value is.
The fifth metric I look at is the average number of days a property sits on the market before it sells. This also improved in the 3rd quarter of 2013 from the same time a year ago. The average time a residential property sat on the market before it sold decreased by 22.2% from the same time a year earlier. This means that homes are not lingering on the market as long which is an indication that sellers are pricing their homes to sell and that there is an increase in buyer demand for homes both of which are positive things for Tallahassee's real estate market.
Last but not least, the total number of distressed sales (foreclosures and short sales) compared to the total number of home sales in the 3rd quarter of 2013 decreased by 9.1% from the same time a year ago. Distressed sales only made up 13.9% of total sales in Tallahassee in the 3rd quarter of this year which is much better than 23% last year at this time. This is great news! Distressed sales typically sell at a discount compared to normal sales. These discounted sales prices typically depress overall home prices by bringing down the values of surrounding properties. The large number of distressed sales over the last few years has continued to keep home prices down, so the fact that distressed sales are now making up a smaller portion of total sales leads the way to increasing property values.
Overall Tallahassee's real estate market is continuing to improve. It will most likely continue to improve, and prices will most likely increase modestly in the foreseeable future. A couple things that could hinder the recovery would be if we have a sharp increase in interest rates or if the number of short sales and foreclosures begins to increase again. Interest rates will most likely go up, but probably modestly, and foreclosures and short sales will probably to increase slightly in Tallahassee as banks begin to unload property again. However the improved economy and increase in buyer demand will most likely be enough carry our real estate market in a positive direction in the near future.
The summary of the 3rd quarter real estate metrics is below.
- 26.2% increase in the number of properties listed for sale. (1,297)
- 29.3% increase in the number of properties sold. (887)
- 3.03% increase in the average sale price ($185,035 average sale price)
- 0.6% increase in the average sale price/list price ratio (96.61%)
- 22.2% decrease in the average number of days on the market. (98 days)
- 9.1% decrease in the portion of distressed sales compared to total sales. (13.9% of all sales were distressed sales)