Bobby's Real Estate Column
4th quarter 2015 Tallahassee Residential Real Estate Market Snapshot And Year Over Year Market Statistics.
After seeing robust year over year gains in sales and home prices in the first half of 2015, the residential real estate market underwent somewhat of a cooling off period in the 4th quarter of 2015. Both the number of homes sold and the number of properties listed for sale remained pretty much flat compared to the 4th quarter of 2014. Also, in the 4th quarter of 2015 average home prices actually saw a sizable 6.1% drop compared to the same time period a year earlier. This is the biggest year over year drop in home prices that we have seen in quite some time in Tallahassee, but I don't think this is something to be too concerned about. In a normal real estate market it's common to have some ebbs and flows in the market. In the first half of 2015 we saw year over year increases in home values reaching nearly 20%. The decrease in home prices that we saw in the 4th quarter is most likely the market correcting itself after a very hot selling season in the Spring and Summer of 2015. If we see year over year values continue to fall into the first half of 2016, then we might have something to worry about, but as of right now I would not worry about prices falling much further.
Besides the drop in home prices, the rest of the real estate market data that I analyzed seemed to show signs that our real estate market is doing fine. In the 4th quarter of 2015 the average time it took a sell a property was 86 days which was 15.7% quicker than what it took in the same period a year prior.
The average sale price/listing price ratio decreased by 0.16% year to year in the 4th quarter of 2015, but still was at a healthy level of 96.57%. This means that in the 4th quarter of 2015 the average home sold for 96.57% of it's listing price. That high of a sale price/listing price percentage shows that home buyer demand is very robust in our local real estate market.
Another indication that our local real estate market is doing well is that distressed sales (short sales and foreclosures) continued to fall, making up a smaller portion of all real estate sales. Distressed sales only made up 13.7% of total sales in the 4th quarter of 2015. This is down by 4.2% from the 4th quarter of 2014 when distressed sales made up 17.9% of total sales. Distressed sales typically sell at a discount compared to non distressed real estate sales, and they bring down the values of surrounding properties. The more distressed sales we have the harder it's going to be for homes to appreciate in value, so the decrease in distressed sales is very positive for our local real estate market.
Some areas of Tallahassee fared better than others. For instance, southwest Tallahassee was the biggest loser out of all four quadrants of Tallahassee in the 4th quarter of 2015. SW Tallahassee saw the biggest drop in home prices. At the same time, properties in the northwest seemed to do pretty well. In northwest Tallahassee we saw prices, sales and the number of properties listed for sale all go up while the average days on the market it took to sell a home and distressed sales both went down. Southeast and Northeast Tallahassee both saw modest decreases in home values as well as in sales and listing activity.
Overall I think our real estate market in Tallahassee is doing well and remained healthy in the 4th quarter of 2015. The nearly 20% year over year increase in home prices that we saw in the early part of 2015 was clearly not a sustainable rate of increase, and the decrease in value we saw in the 4th quarter was just the market correcting itself from such sharp gains recognized earlier in the year.
Another point worth noting is that the new government imposed regulations on mortgages which is known as TRID (Tila Respa Integrated Disclosure) rules went into effect on October 3rd. The TRID rules make the closing process take longer which most likely resulted in many closings that would have normally closed in 2015 get pushed into 2016. If not for the new TRID rules, it's very likely we would have seen more closings take place in the 4th quarter of 2015.
Interest rates also creeped up a little bit in the 4th quarter of 2015, and the stock market began to fall as well. These two things also could have had somewhat of a dampening affect on buyer activity in the 4th quarter of 2015.
I would expect the real estate market in Tallahassee to take off early in the year in 2016 the same way it has the past couple of years. I would expect activity to pick up in January and February, and by March the selling season should be in full swing. I would expect both sales and listings activity to increase early in the year while home values should remain flat or see very modest increases compared to the same time a year ago.
Two major developments in Tallahassee that should bring more jobs to Tallahassee are the new VA Hospital on the corner of Blairstone Road and Orange Avenue that is suppose to open up this year and also the new Tallahassee Center (formerly the Tallahassee Mall) which is set to open in Spring of this year. Both of these developments will bring new jobs to Tallahassee which will help bolster our local economy which in turn will strengthen our local real estate market. Just a tip...if you are an investor looking at purchasing rental properties...it may be a good idea to look for deals near these two new developments. These new jobs from the new devopements mean there will be people looking for housing close to their new jobs. Feel free to call me with any questions about properties in these areas.
A summary of the 4th quarter year over year residential real estate market statistics for Leon County is below.
Tallahassee as a whole