3rd Quarter 2016 Tallahassee Residential Real Estate Market Snapshot And Year Over Year Market Statistics.
If I could sum up the Tallahassee Real Estate Market in a nutshell this 3rd quarter, I would say it gravitated to even more of a seller's market. Compared to the same time a year ago, the main market trends we saw this 3rd quarter was fewer homes listed for sale, the number of homes sold stayed about the same, and home prices went up. Distressed sales (foreclosures and short sales) continued to decrease as a percentage of total sales. Homes sold quicker in the 3rd quarter compared to the same time a year ago, and homes sold for an amount closer to the listing price than compared to the same time a year ago.
The steady demand from home buyers and the decreased inventory have made it a great market if you are selling your home, but for home buyers it has been quite a frustrating market. Well priced homes in decent locations that show well have been flying off the market making it tough for buyers to find the right home.
First off let's talk about number of homes listed for sale. As I stated above, there seems to be a housing inventory issue. Compared to the same time last year, the number of properties listed for sale decreased by 9.3%. This has caused a shortage of homes to meet the steady demand for homes.
Housing demand in the 3rd quarter of this year remained about the same compared to the same time a year ago. The number of properties sold in the 3rd quarter of this year only decreased by less than 1% compared to the same time last year. This is certainly good, and it's an indication that the job market is getting better or at least holding steady.
With housing demand staying steady and the inventory of homes decreasing from last year, home prices were pushed up in the 3rd quarter of this year compared to the same time a year ago. Year over year, home prices were up 3.9% in the 3rd quarter of this year. This increase is a healthy and sustainable level of price appreciation that falls within the historical level of 3%-5% annual increase in home prices.
Homes also sold faster in the 3rd quarter of 2016 compared to the 3rd quarter of 2015. Average days on the market in the 3rd quarter of this year decreased by 2.3% compared to last year with the average home selling after being on the market for 82 days.
The sale price/list price ratio, which shows how much a home sells for compared to what is was listed for sale at, went up in the 3rd quarter of 2016 compared to the same time a year prior. On average, homes in Leon County sold for 97.9% of the listing price in the 3rd quarter of 2016. Such a high sale price/listing price ratio is another strong indicator that we are in a seller's market.
Last but not least, we saw another year over year decrease of distressed sales ( short sales and foreclosures). Distressed sales only made up 8.2% of total sales in the 3rd quarter of this year compared to 10% in the 3rd quarter of 2015. Distressed sales typically sell at a discount compared to non-distressed sales, and they typically bring down the values of surrounding properties. Distressed sales in a normal housing market make up around 5% of total sales, so we still have a little bit of room to go before distressed sales are back to normal levels, but with distressed sales only accounting for 8.2% of total home sales, we are much closer to the historically normal level of 5% then compared to the 25%-30% level we were at during the depth of the recession.
Overall the real estate market is doing well in Tallahassee. It seems the job market is getting better or at least holding steady which is causing a healthy demand for housing. There is no problem with housing demand, but with the supply of housing. The main problem with our real estate market right now is that we have such a shortage of inventory to meet the growing demand in an improving economy. The reason for the shortage of homes I think is a problem within itself that won't be an easy fix.
High land costs in Tallahassee and expensive building regulations in Leon County (and around the state and country for that matter) have made new construction very expensive. Most new construction is geared towards bigger homes where builders can make more of a profit. Builders can't build starter homes and make money, so this has caused an inventory shortage among starter homes. New construction levels are far below normal historical levels, and this is causing an inventory shortage. I believe this will be a tough fix, and there will be inventory shortage for quite some time.
This will create opportunities for some though, including people looking to buy older homes in need of work to fix and flip them for a profit to end users. More home buyers may also need to take advantage of renovation loans where one can tie in the costs of needed repairs to his/her loan. This is a good option for first time buyers who don't have a lot of cash to make needed repairs, and could provide a way for a young first time home buyer to get into a house for a good price in this inventory constrained market.
In the near future I would expect to see the market stay fairly stable. The fact that this is an election year may be partly to blame for the inventory shortage as many homeowners may be nervous about the outcome of the election and may be postponing the sale of their home until after the election. We won't know if this is the case until after the election though. Either way, I think the inventory shortage will be a problem for at least the next couple years until new construction prices go down.
A summary of the 3rd quarter year over year residential real estate market statistics for Leon County is below.
Tallahassee as a whole
- Listings decreased by 9.3% (1,379 properties listed for sale)
- Sales decreased by less than 1% (1,116 properties sold)
- Average sale price increased by 3.9% (Average sale price was $196,849)
- Average Sale price/list price ratio increased by 1% (Average sale price/list price ratio was 97.9%)
- Average days on the market to sell decreased by 2.3% (Average home sold after 82 days on the market)
- Proportion of distressed sales to total sales decreased by 1.8% (distressed sales accounted for only 8,2% of all sales).
Northeast Tallahassee
- Listings decreased by 2.2% (707 properties listed for sale)
- Sales decreased by 3.6% ( 562 properties sold)
- Average price increased by 3.1% ( Average sale price was $258,553)
- Sale price/list price ratio increased by 1.11% (Average sale price/list price ratio is 98%)
- Average days on the market decreased by 2.7% (took a home 73 days on average to sell)
- The proportion of distressed sales to total sales decreased by 1.5% ( distressed sales made up 5.2% of total number of sales)
Northwest Tallahassee
- Listings decreased by 15.3% (382 properties listed for sale)
- Sales increased by 7.2% (327 properties sold)
- Average sale price increased by 2.1% (average sale price was $121,029)
- Average sale price/list price ratio increased by 0.57% (average sale price/list price ratio was 97.41%)
- Average days on the market before a home sold increased by 8%. ( On average it took 94 days before a home sold)
- The proportion of distressed sales compared to total sales decreased by 1.7% (distressed sales made up 9.8% of total sales)
Southeast Tallahassee
- Listings decreased by 14.8% (202 properties listed for sale)
- Sales increased by 5.1% (165 properties sold)
- Average prices increased by 18.2% (average purchase price $181,162)
- Average sale price/list price ratio increased by 1.05% ( average sale price/list price ratio was 98.39%)
- Average days on the market before a home sold increased by 1.3% (Average home sold after 77 days on the market)
- The proportion of distressed sales compared to total sales decreased by 0.1% (13.3% of all sales were distressed sales)
Southwest Tallahassee
- Listings decreased by 20% ( 88 properties listed for sale)
- Sales decreased by 16.2% (number of properties sold 62)
- Average sales price increased by 9.2% (average purchase price was $79,170)
- Average sale price/listing price ratio decreased by 0.33% (average sale price/list price ratio was 96.10%)
- Average days on the market before a property sold decreased by 28.8% (average home sold after being on the market for 116 days)
- The proportion of distressed sales compared to total sales decreased by 8.7%. (distressed sales made up 12.9% of the total number of sales).
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