3rd Quarter 2017 Tallahassee Residential Real Estate Market Snapshot And Year Over Year Market Statistics.
The residential real estate market in the 3rd quarter of this year pretty much was a continuation of what we saw in the 2nd quarter earlier this year. Year over year in the 3rd quarter, home prices were up, the number of properties that sold went slightly up, and the number of homes listed for sale continued to go down leaving home buyers with fewer homes to choose from compared to the same time last year. The average number of days on the market to sell a home went down, the sale price to list price ratio (what a home sells for compared to it's listing price) remained flat for the most part compared to a year ago. Lastly, distressed sales (foreclosures and short sales) continued to drop making up a smaller percentage of total overall sales.
The one issue that we have in our local real estate market (as well as state and national) is the vast shortage of homes for sale on the market. Right now we are operating at about a 3 months supply of housing inventory in Leon County, which means that at the current pace of sales it would take 3 months for all the homes to sell if no more homes were listed on the market. A normal market has about a 6 months supply of housing inventory. In Leon County in this 3rd quarter, the number of listings available for sale went down 4.9% compared to the 3rd quarter of 2016. Buyers are faced with fewer choices now days, creating a tough market to buy a home. Buyers are having to wait longer to find the right home, and multiple offers on homes are commonplace in this market.
The number of properties that sold continued to increase in the 3rd quarter of this year compared to the same time last year. Year over year home sales went up by 2.3% this 3rd quarter. An improving economy along with more jobs and higher wages are fueling a demand in home buying. People feel much more confident in the housing market, and the skepticism that home buyers held about buying a home in the years following the housing market crash, is seeming to finally fade away.
As the number of properties available for sale has decreased and the demand for homes is continuing to increase, home prices continued to go up in the 3rd quarter of 2017. Year over year home prices went up by a strong 4.9% in the 3rd quarter of this year. While a 4.9% increase in value is a very good, it falls within the historical 3%-5% a year increase in home values which is considered both healthy and sustainable. What this means is that these price gains we are seeing are more than likely a permanent long term price increase instead of a home price bubble. This should give homeowners and potential home buyers confidence that our real estate market is healthy, home prices will most likely remain stable, and buying a home is a solid long term investment.
The number of days on the market that it took a home to sell went down pretty drastically in the 3rd quarter of this year compared to the same time a year ago. The year over year average days on the market dropped by 19.8%, coming down from 81 days in the 3rd quarter of 2016 to only 65 days in the 3rd quarter of 2017. Fewer homes for sale along with an increasing demand for homes has clearly been the cause of homes selling quicker this year than last.
The average sale price/listing price ratio, which measures how much a home sells for compared to it's listing price, stayed about the same in the 3rd quarter of this year compared to the same time a year ago. It went down just 0.1% this year, with the average home selling for 97.83% of it's listing price. This high sale price to listing price ratio once again is another indication that we are in a very strong seller's market.
Finally, distressed sales (short sales and foreclosures) continued to drop like a rock in the 3rd quarter of 2017. Distressed sales only made up 3.7% of total sales in the 3rd quarter of 2017. This is great compared to 3rd quarter of 2016 when distressed sales made up 8.3% of total sales. Fewer distressed sales leads to a stronger increase in home values since distressed sales typically sell at a discount driving down values of neighboring properties.
Overall our local real estate market is very strong. Demand for homes is solid and getting even stronger as the economy continues to improve. Home prices are going up at a steady and sustainable rate. Distressed sales are becoming harder and harder to find as the inventory of distressed sales continues to dwindle down. The only problem we have is the lack of housing inventory available. Unfortunately this is not going to be a quick fix. We have had about a decade following the recession, of very low levels of new construction. Now that the pent up demand for homes has been released with the vast improvement of the economy, we now don't have enough inventory available to meet that demand. Good news is that construction over the past year or so has finally ramped up, and in probably about 3 years or so we'll have a better balance of homes available to meet the home buyer demand. There are a few large subdivisions of new homes being built in Tallahassee right now which over the next few years should supply a very large number of new homes.
Continue to watch out what is going on with interest rates too. The Federal Reserve has announced that it will start to sell off it's treasury bond holdings which will have a direct impact on mortgage rates. The Fed has been raising the Federal Funds Rate the past couple years, but the Federal Funds Rate more so affects credit card rates and business/commercial loan interest rates then it does mortgage rates. The selling of the treasury bonds will have a direct impact on mortgage rates though.
The year over year real estate market metrics for Tallahassee as a whole, as well as by quadrant, are listed below.
Tallahassee as a whole
- Listings decreased by 4.9% (1,370 Homes listed for sale)
- Sales increased by 2.3% (1,181 properties sold)
- Average sale price increased by 4.9% (Average sale price was $205,881)
- Average Sale price/list price ratio decreased by 0.1% (97.83%)
- Average days on the market to sell decreased by 19.8% (65 days on the market before selling)
- Proportion of distressed sales to total sales decreased by 4.6% (distressed sales made up 3.7% of total sales)
Northeast Tallahassee
- Listings decreased by 5.3% (701properties listed for sale)
- Sales decreased by 2.7% (560 properties sold)
- Average price increased by 7.4% (Average price was $277,393)
- Sale price/list price ratio decreased by 0.21% (average sale price/list ratio was 97.82%)
- Average days on the market decreased by 22.2% (56 days on the market on average before selling)
- The proportion of distressed sales to total sales decreased by 3.6% (distressed sales made up 1.6% of total sales)
Northwest Tallahassee
- Listings decreased by 3% (385 properties listed for sale)
- Sales decreased by 5.6% ( 356 properties sold)
- Average sale price increased by 10% ( average sale price was just $136,544)
- Average sale price/list price ratio increased by 0.47% (Average sale price/list price ratio was 97.96%)
- Average days on the market before selling went down 27% (67 days on the market on average before a home sold)
- The proportion of distressed sales compared to total sales decreased by 4.2% (distressed sales made up 5.6% of total sales)
Southeast Tallahassee
- Listings decreased by 8.5% (195 properties listed for sale)
- Sales increased by 9.4% (186 properties sold)
- Average price decreased by 6% (Average sale price was $171,115)
- Average sale price/list price ratio decreased by 0.54% (sale price/list price ratio was 97.94%)
- Average days on the market before a home sold decreased by 9% (70 days)
- The proportion of distressed sales compared to total sales decreased by 8.1% (distressed sales made up 4.8% of total sales)
Southwest Tallahassee
- Listings decreased by 3.3% (89 properties listed for sale)
- Sales increased by 14% ( 79 properties sold)
- Average sales price increased by 22.1% (Average sale price was $93,263)
- Average sale price/listing price ratio increased by 1.27% ( Average sale price/listing price ratio was 96.74%)
- Average days on the market before a property sold decreased by 9.8% ( 101 days)
- The proportion of distressed sales compared to total sales decreased by 7.1% (distressed sales made up 7.6% of total sales)
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