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