Saturday, July 29, 2017

Tallahassee 2nd Quarter Real Estate Market Report

2nd Quarter 2017 Tallahassee Residential Real Estate Market Snapshot And Year Over Year Market Statistics.

Year over year home prices and sales continued to climb in the 2nd quarter of 2017.  Strong buyer demand stemming from an improving economy and a spike in consumer confidence has caused more people to jump off the fence and take the plunge to buying a home.  Home prices in the 2nd quarter of 2017 increased by a solid 6.4% compared to the same time a year ago bringing the average home price in Leon County up to $216,823.  The number of properties that sold went up by 3.9%  compared to the same time a year ago. 

 
On the supply side of the housing equation, the inventory of homes available for sale has continued to shrink. In the 2nd quarter of 2017 the number of properties available for sale went down by 7% compared to the same time a year ago. 

 
Low levels of housing inventory has been a problem in our real estate market for a couple years now and has continued to get worse.  This is making it difficult for home buyers to find the right home in a reasonable time frame. The increased demand for housing combined with the decrease in the number of properties listed for sale has been the main cause of increasing home prices.  While this makes it a tough market for buyers, it also makes it a great market for homeowners looking to sell their home. 

 
There are several factors contributing to the shortage of housing inventory.  The main factor is a lack of new construction of homes.  A shortage of lots available to build on and a shortage of construction labor along with expensive regulatory and permitting fees has made it difficult for builders to built new homes at the rate they need to in order to meet the growing demand for housing.  

 
Another factor leading the lack of inventory is that there are still some homeowners who are underwater on their mortgages from buying at the height of the market 10 years ago. This means they still owe more on their mortgage than their home is worth, so they are unable to sell their home without bringing money to closing. 

 
Also, there are a lot of homes that are owned by investors who bought homes during the recession as rental properties. These investors are hanging on to these homes instead of selling them, so this is also part of the reason for the lack of housing inventory.  These are homes that would normally be on the market for sale, but instead they are being rented out.  

 
In the 2nd quarter of 2017 homes in Leon County sold in 76 days on average which is 3 days shorter than it took homes to sell a year ago. With the increasing demand for homes and the decreased supply of homes for sale, this should be no surprise that homes are selling quicker than they did a year ago. 

Also, the sale price to listing price ratio, which compares how much a home sold for  compared to it's listing price, stayed about the same going down just 0.3% from the 2nd quarter last year.   In the 2nd quarter of this year, homes sold for 97.81% of listing price on average.  This high sale price to listing price ratio should also not be a surprise given the fact that demand for housing is far outpacing the supply of homes available for sale. 

 
Another market trend worth taking note of is that the proportion of distressed sales (foreclosures and short sales) compared to total sales continued to go down in the 2nd quarter of 2017 compared to the same time a year ago. Distressed sales only made up 3.98% of total sales in the 2nd quarter of 2017 which is down by 2.77% from a year ago when distressed sales made up 6.75% of total sales.  

 
Distressed sales typically sell at a discount compared to non distressed sales and they bring down the value of surrounding properties.  The fact that distressed sales are back to a historically normal level is a great thing for property values and our real estate market as a whole.  At the height of the foreclosure crisis when distressed sales made up 25%-30% of total sales, home prices were forced downward which pushed prices low and kept them from rising.  There are distressed sales out there now, but they are few and far between.  

 
To sum up the condition of the housing market in Leon County in the 2nd quarter, you could say that the demand for homes is very, very strong, but we need more homes for sale on the market.  There are more and more people entering the market to buy a home now as the economy improves and as a growing number of millennials are now getting to the point in their lives where they are ready to buy a home, but the supply of homes available is not adequate to meet the growing demand.  In the near future I would expect these conditions to persist. There are some large subdivisions planned to be built over the next few years here in Tallahassee which could provide the much needed supply of homes, but until those come into existence we are going to have a shortage of homes available  

 
The year over year market statistics for Leon County as a whole and by quadrant for the 2nd quarter of 2017 are listed below. 


Tallahassee as a whole

  • Listings decreased by 7% (1736 Properties listed for sale) 
  • Sales increased by 3.9% (1,307 properties sold) 
  • Average sale price increased by 6.4% (Average sale price $216,823)
  • Average Sale price/list price ratio decreased by 0.3% (97.81%)
  • Average days on the market to sell decreased by 3.8% (76 days on the market)
  • Proportion of distressed sales to total sales decreased by 2.77% (distressed sales made up 3.98% of total sales) 

 
Northeast Tallahassee

 

  • Listings decreased by 11.96% (883 properties listed for sale) 
  • Sales increased by 6.2% (684 properties sold)
  • Average price increased by 4.5% (Average price was $273,689)
  • Sale price/list price ratio decreased by 0.63% (average sale price/list ratio was 97.75%)
  • Average days on the market decreased by 1.4% (68 days on the market on average) 
  • The proportion of distressed sales to total sales decreased by 1.9% (distressed sales made up 2.6% of total sales) 

 
Northwest Tallahassee


  • Listings decreased by 4.66% (471 properties listed for sale) 
  • Sales decreased by 2.79% ( 348 properties sold) 
  • Average sale prices were virtually unchanged from last year with just a $50 average increase ( average sale price was just  $133,049) 
  • Average sale price/list price ratio increased by 0.51% (Average sale price/list price ratio was 97.79%)
  • Average days on the market before a home sold was unchanged from a year ago at 88 days. 
  • The proportion of distressed sales compared to total sales decreased by 3.5% (distressed sales made up 6% of total sales) 

Southeast Tallahassee

 

  • Listings increased by 6.2% (277 properties listed for sale)
  • Sales increased by 15.3% (211 properties sold) 
  • Average price increased by 11% (Average sale price was $205,904)
  • Average sale price/list price ratio decreased by 0.19% (sale price/list price ratio was 98.22%) 
  • Average days on the market before a home sold decreased by 18.7% (74 days) 
  • The proportion of distressed sales compared to total sales decreased by 1.4% (distressed sales made up 5.7% of total sales)  
Southwest Tallahassee
  • Listings increased by 5.4% (105 properties listed for sale) 
  • Sales decreased by 12.3% ( 64 properties sold) 
  • Average sales price increased by 21.3% (Average sale price was $100,588) 
  • Average sale price/listing price ratio increased by 1.44% ( Average sale price/listing price ratio was 96.93%) 
  • Average days on the market before a property sold increased by 19.8% ( 115 days) 
  • The proportion of distressed sales compared to total sales decreased by 9.36 % (distressed sales made up 1.6% of total 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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