Monday, April 24, 2017

Tallahassee 1st Quarter 2017 Real Estate Market Report

Bobby's Real Estate Column   
1st Quarter 2017 Tallahassee Residential Real Estate Market Snapshot And Year Over Year Market Statistics.

Average year over year home prices continued to increase in the 1st quarter of 2017 compared to the first quarter of 2016.  Year over year home sales remained flat in the first quarter of this year, and the number of properties listed for sale dropped by close to 10% compared to the same time period in 2016. Also, on average in the first quarter of this year homes took less time to sell compared to the same time period in 2016.  The homes that did sell in the 1st quarter of this year ended up selling for a price closer to the listing price compared to a year ago.  Lastly, in the first quarter of this year  we saw a big drop in distressed sales (foreclosures and short sales)  in Leon County.  In the first quarter of this year, distressed sales only made up 6.3% of all sales. During the same time a year ago, distressed sales made up 10.8% of total sales, so in the last year distressed sales have almost been cut in half.  

 
First off, let's discuss number of listings for sale which is also known as the housing inventory.  For the past few years we have had a shortage of housing inventory available to meet the growing demand from home buyers.  This past year housing inventory in Leon County continued to decline.  Listings decreased 8.6% in the first quarter of this year compared to the same time period a year earlier. We are running about a 3 month supply of inventory which means that if no new houses were listed for sale, it would take 3 months for all of the homes on the market to sell. In a normal market we have about a 6 months supply of inventory. 

 
Lack of new construction is one of the main issues we are facing which is causing the shortage of housing inventory. Also, there are still a lot of people who owe more on their mortgages than their property is worth which means those people can't sell their homes. There may be relief coming  in terms of more housing inventory though! New construction this year is on the rise and new construction subdivisions are going up all around in Leon County, including the large subdivision on Walaunnee Way, which will provide buyers with more housing inventory in our listing starved real estate market. 

 
The next metric I would like to discuss is home sales.  Home sales in the first quarter of this year remained flat from the same time last year with less than a tenth of a percent year over year decrease in sales.  This is good because it means that strong home buyer demand is holding steady.  

 
Home prices continued to climb in the first quarter of 2017.  We saw a year over year increase in home values of 6.9% in Leon County in the first quarter of 2017. Homes have historically appreciated at a rate of about 3%-5% a year, so the 6.9% increase in home values that we saw in the first quarter of this year was a very strong showing.  Lack of inventory is probably one of the main drivers for the increasing prices.  I think once we see housing inventory go up to normal levels, I think we'll also see home price increases drop back down to around the 3% or 4% level of annual appreciation that is in line with historical norms.  

 
On average, homes in the first quarter of this year sold for 97.79% of what they were listed at for sale.  That is up 97.25% from the same time last year.  The fact that homes are selling for 97.79% of their asking price is an indicator that we are in a very strong sellers market.  

 
The amount of time that it took to sell a home in the first quarter of 2017 was shorter compared to the first quarter of 2016.  In the first quarter of 2017 homes sold on average after being on the market for just 91 days compared to 97 days in the first quarter of 2016.  

 
Finally, it looks like distressed sales (short sales and foreclosures)  have almost come down to pre-recession levels for the first time in about 10 years.   In the first quarter of 2017 distressed sales only made up 6.3% of total sales in Leon County compared 10.8% in the first quarter of 2016.   This is great news for homeowners because distressed sales generally sell below market value, and bring down the value of surrounding homes.  The low level of distressed sales is bad news for investors though since fewer distressed properties for sale means there are fewer deals on low priced homes to be had.  

 
Overall the real estate market is cruising along well in Leon County.  Prices are up and home sales are steady. It's a great time if you are wanting to sell your home.  Homes that are priced right for the market and that are in good condition are selling quickly.  This is especially true at this time of year when we are now in the full swing of the selling season.  The lack of inventory though is making it difficult for home buyers.  For home buyers looking for homes under $250,000, it's especially difficult.  

 
In the near future I would expect interest rates to stay fairly steady around 4%.  Interest rates have continued to come back down since their post election spike, and are back down under 4% for the first time since November.  Also, towards the end of the year I would expect to see more inventory hitting the market providing much needed relief to a housing market with very low housing inventory.  I don't think that additional inventory will get here by this selling season.  It might not be until next year that the affects of the relief of the additional supply of housing is felt.  With the economy getting better I would expect demand for housing to stay steady and maybe even get a little bit better.  If tax reform comes and we get our tax rates lowered, I would expect this to spur more home buying and also to fuel more home building since builders will have more money to invest in building new homes.  

 
A list of the year over year housing metrics for for the 1st quarter of this year in  Leon County as a whole and by quadrant are listed below for you to review. 

 

Tallahassee as a whole

 
  • Listings decreased by 8.6% (1,468 properties listed for sale) 
  • Sales decreased by 0.07% (869 properties sold)
  • Average sale price increased by 6.9%  (Average sale price was $192,701)
  • Average Sale price/list price ratio increased by 0.54% (Average sale price/list price ratio was 97.79%)
  • Average days on the market to sell decreased by 6.4% (Average home sold after 91 days on the market)
  • Proportion of distressed sales to total sales decreased by 4.5% (distressed sales accounted for only 6.3% of all sales). 

 
Northeast Tallahassee

 

  • Listings decreased by 9.2% (723 Properties listed for sale) 
  • Sales increased by 8.1% ( 424 properties sold) 
  • Average price increased by 5.6% ( Average sale price was $262,910)
  • Sale price/list price ratio increased by 0.59% (Average sale price/list price ratio is 98.21%) 
  • Average days on the market decreased by 8.9% (took a home 82 days on average to sell) 
  • The proportion of distressed sales to total sales decreased by 3.7% ( distressed sales made up 2.4% of total number of sales) 

 
Northwest Tallahassee

 
  • Listings decreased by 4.5% (442 properties listed for sale) 
  • Sales decreased by 11.6%  (236 properties sold) 
  • Average sale price increased by 13.1% (average sale price was $129,894) 
  • Average sale price/list price ratio increased by 1.63% (average sale price/list price ratio was 97.25%)
  • Average days on the market before a home sold increased by 6.7%. ( On average it took 112 days before a home sold) 
  • The proportion of distressed sales compared to total sales decreased by 8.3.% (distressed sales made up 8.9% of total sales) 

Southeast Tallahassee

 

  • Listings decreased by 10% (206 properties listed for sale) 
  • Sales decreased by 6% (140 properties sold)
  • Average prices decreased by 17% (average purchase price $139,485)
  • Average sale price/list price ratio increased by 0.58% ( average sale price/list price ratio was 97.85%) 
  • Average days on the market before a home sold decreased by 14.4% (Average home sold after 80 days on the market) 
  • The proportion of distressed sales compared to total sales increased by 1.4% (11.4% of all sales were distressed sales) 
Southwest Tallahassee
  • Listings decreased by 17.8% ( 97 properties listed for sale) 
  • Sales increased by 1.5% (number of properties sold 69) 
  • Average sales price increased by 13% (average purchase price was $84,065)
  • Average sale price/listing price ratio decreased by 1.82% (average sale price/list price ratio was 92.72%) 
  • Average days on the market before a property sold decreased by 9% (average home sold after being on the market for 101days) 
  • The proportion of distressed sales compared to total sales decreased by 3.1%. (distressed sales made up 11.6% of the total number of sales). 

Tuesday, January 10, 2017

Tallahassee 4th Quarter Real Estate Market Report

4th Quarter 2016 Tallahassee Residential Real Estate Market Snapshot And Year Over Year Market Statistics.

The real estate market in Leon County in the 4th quarter of 2016 was robust and saw strong gains across most metrics analyzed compared to the 4th quarter of 2015.  The number of properties sold was way up, the average sales price of a home was way up, the number of days on average it took to sell a home went down, homes sold closer to their asking prices compared to a year ago, and distressed sales (foreclosures and short sales) made up a smaller percentage of total overall sales.   The only problem we are still having in our local real estate market is that the number of homes being listed for sale has continued to decrease thus shrinking the amount of available housing inventory that buyers have to chose from. Let's look at and analyze each metric individually.  

 
Let's start out with housing inventory levels and the number of homes listed for sale.  The 4th quarter of 2016 saw a 13.1% decrease in homes listed for sale compared to the 4th quarter of 2015.  With an improving economy, housing demand has continued to increase.  More people have jobs, and incomes have finally started to rise a little over the last year, and because of this we need more homes on the market to meet the growing demand for homes. However, we are seeing the opposite with fewer homes on the market compared to last year. Expensive land costs and expensive regulations have curtailed new construction of homes. Also, fewer people are listing existing homes as well for whatever reason. It's possible that since 2016 was an election year that many put selling their homes on hold.  If that is the case then we should hope to see an increased level of housing inventory in 2017 to meet the growing demand for homes. Time will tell. 

 
Even though year to year listings were down in the 4th quarter of 2016, sales were up. We saw a 9.5% year over year increase in homes sales across Leon County in the 4th quarter of 2016.  An improving economy is most likely the reason more people are bought homes this past year.  

 
With the numbers of properties available for sale going down and the number of properties sold going up, year over year prices went up big time in the 4th quarter of 2016. In the 4th quarter of 2016, Leon County saw a whopping 17% increase in the average sale price with the average sales price jumping from $175,193 in the 4th quarter of 2015 to $204,980 in the 4th quarter of 2016.  

 
The sale price/listing price ratio increased by 0.53% in the 4th quarter of 2016 compared to the same time a year earlier. Homes actually sold for 97,33% of the homes listing price in the 4th quarter of 2016.  This high percentage is indicative of a it being a seller's market. 

 
The average number of days that it took for a home to sell in the 4th quarter of 2016 went down by 2.3% compared to the same time period a year ago.  In the 4th quarter of 2016 homes sold in 84 days on average. 

 
Finally, distressed sales (foreclosures and short sales) made up a smaller percentage of total sales in the 4th quarter of 2016 compared to the same time a year ago.  Distressed sales only made up 7.9% of all sales in Leon County in the 4th quarter of 2016 compared to 13.8% in the 4th quarter of 2015.   In a normal market, distressed sales have historically made up about 5% or less of total sales, so we are getting close to distressed sales getting back to their historically normal levels. 

O
verall the real estate market here in Leon County seems to be booming in terms of increased level of demand. Increasing number of sales, home prices, and a sale price/listing price ratio combined with decreased number of days on the market all point to strong gains in demand for homes.  We are still struggling on the supply side though with far fewer homes available to meet the growing demand. This means that in Leon County in 2017 it will be a real estate market best suited for selling a home, and it will be a tough market for people looking to buy a home. Don't mistake this for a boom similar to 2005-2007 though. Homeowners still need to price their homes according to what recent sales suggest their homes are worth and also sellers need to get their homes in tip top shape in order to get top dollar.  Home buyers these days have become very picky...probably due to HGTV. 

 
Increasing interest rates and home prices could curb demand for homes somewhat in 2017, but due to a continuously improving economy and a more business friendly White House, we will probably see housing demand continue to go up.   The question is will more homeowners begin to list their homes for sale. I think more homeowners will list their homes due to increasing prices which will help ease the housing shortage, but I don't think it will be enough to bring about an equilibrium in housing supply and housing demand. It will still be a sellers market in 2017. 

 
Below are the real estate market statistics for Leon County as a whole as well as for each quadrant of Leon County. 

 
Tallahassee as a whole

 
  • Listings decreased by 13.1% (978 properties listed for sale) 
  • Sales increased by 9.5% (891 properties sold)
  • Average sale price increased by 17%  (Average sale price was $204,980)
  • Average Sale price/list price ratio increased by 0.53% (Average sale price/list price ratio was 97.33%)
  • Average days on the market to sell decreased by 2.3% (Average home sold after 84 days on the market)
  • Proportion of distressed sales to total sales decreased by 5.9% (distressed sales accounted for only 7.9% of all sales). 

 
Northeast Tallahassee

 
  • Listings decreased by 15.2% (404 Properties listed for sale) 
  • Sales increased by 12.9% ( 428 properties sold) 
  • Average price increased by 16.7% ( Average sale price was $270,073)
  • Sale price/list price ratio increased by 0.9% (Average sale price/list price ratio is 97.45%) 
  • Average days on the market decreased by 9.6% (took a home 74 days on average to sell) 
  • The proportion of distressed sales to total sales decreased by 4.4% ( distressed sales made up 5.9% of total number of sales) 

 
Northwest Tallahassee

 
  • Listings decreased by 20% (282 properties listed for sale) 
  • Sales increased by 2% (251 properties sold) 
  • Average sale price increased by 7.4% (average sale price was $133,390) 
  • Average sale price/list price ratio increased by 1.2% (average sale price/list price ratio was 96.6%)
  • Average days on the market before a home sold increased by 4.7%. ( On average it took 89 days before a home sold) 
  • The proportion of distressed sales compared to total sales decreased by 9.1% (distressed sales made up 8.4% of total sales) 


Southeast Tallahassee

 
  • Listings decreased by 3.5% (167 properties listed for sale) 
  • Sales increased by 16.7% (140 properties sold)
  • Average prices increased by 17% (average purchase price $181,222)
  • Average sale price/list price ratio increased by 0.85% ( average sale price/list price ratio was 97.75%) 
  • Average days on the market before a home sold decreased by 10.2% (Average home sold after 88 days on the market) 
  • The proportion of distressed sales compared to total sales decreased by 4.4% (6.4% of all sales were distressed sales) 
Southwest Tallahassee
  • Listings increased by 2.5% ( 81 properties listed for sale) 
  • Sales increased by 15% (number of properties sold 69) 
  • Average sales price increased by 68% (average purchase price was $101,616)
  • Average sale price/listing price ratio increased by 2.6% (average sale price/list price ratio was 97.11%) 
  • Average days on the market before a property sold increased by 28% (average home sold after being on the market for 119 days) 
  • The proportion of distressed sales compared to total sales decreased by 2.1%. (distressed sales made up 24.6% of the total number of sales). 

If you have any questions or comments, please contact Bobby Nahoom at (850) 567-0037 or at nahoom1171@yahoo.com
 
 
 

 
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