Tallahassee 3rd Quarter Real Estate Market Report

Bobby's Real Estate Column

3rd Quarter 2018 Tallahassee Residential Real Market Snapshot And Year Over Year Market  Statistics. In the 3rd quarter of this year, Tallahassee's residential real estate market continued to do well.  Home prices in the 3rd quarter of this year saw very strong gains compared to the same time last year.  Also, housing inventory increased sharply compared to the same time a year ago.  The increased housing inventory is much needed and is welcomed by home buyers. In the last 2-3 years, our residential real estate market here is Tallahassee has had a major shortage of homes for sale.  This has made shopping for a home very frustrating for home buyers over the last few years.   Home sales saw a very slight decrease in the 3rd quarter of this year compared to the same time period a year ago.  Rising home prices and rising mortgage interest rates seem to finally be slowing down home sales just a tad.  The average number days it took to sell a home dropped down quite a bit compared to last year, and the average sale price/list price ratio, which measures how much a home sells for compared to it's listing price, stayed about the same as last year going down just slightly.    Lastly, we saw fewer distressed sales (short sales and foreclosures) in the 3rd quarter of this year compared to the same time a year ago. Distressed sales are not good because they generally sell at a discount compared to non distressed sales, and they bring down the values of surrounding properties.  The reduction in distressed sales is a sign that the real estate market is doing well.   So let's start off by talking more in depth about the increase we saw in the number of listings available for sale in the 3rd quarter of this year.  New listings jumped up by a whopping 16% in the 3rd quarter compared to the same time a year ago.  Our market needs the higher level of housing inventory, so this is great news.  Over the last 3 years, a growing number of home buyers have been fighting like cats and dogs over fewer and fewer listings. Multiple offers and properties selling above asking price has become the norm is seems!  Last year in 2017, the number of listings on the market dropped to just a little over a 3 month supply of homes for sale. This is about half of the 6 month supply of homes that is considered normal.  The months supply of homes means is that if no more homes were listed after today, it would take that many months to sell the remaining inventory of homes.  So for example,  with a 3 months supply of homes it would take 3 months to sell all existing inventory if no more homes were listed for sale.  We're now starting to see big jumps in housing inventory levels due to more new construction taking place and more homeowners deciding to cash in on the high prices and put their homes on the market.  If housing inventories continue to go up like we saw them go up in the 3rd quarter of this year, then we could be back to a normal 6 month supply of housing inventory within the next couple of years.   Despite the growing number of properties listed for sale, home prices continued on a sharp upward trajectory in the 3rd quarter of this year.  Average year over year sales prices in the 3rd quarter of 2018 in Tallahassee increased by a whopping 9.1%.  This is far above the 3%-5% range that's considered historically normal.  The strengthening economy is creating more demand for homes as more people have jobs and incomes are going up.  Although the supply of homes is starting to finally go up, it's still very low.  Low levels of housing supply along with strong demand from home buyers has caused home prices to continue to go up.  With the number of homes for sale continuing to go up, we can expect to see price growth cool off within the next year or so.  I think next year we will most likely see home prices fall back into a normal range of appreciation between 3%-5%. Home sales stagnated in the 3rd quarter in Tallahassee, going down just slightly compared to the same time last year.  It appears that rising home prices and rising interest rates are finally starting to curb home sales as the cost of owning a home has gone up quite a bit in the last year. Again, the average home price went up by over 9% within the last year, and the average rate on a 30 year fixed rate mortgage went up from 3.89% a year ago to 4.85% at present time.  The combination of higher home prices and interest rates means that people's mortgage payments are going up.  Even though people's wages are going up, the cost of home ownership is far outpacing the increase in people's wages.   The average number of days a home sat on the market before selling went down by 17.2% in the 3rd quarter of this year compared to the same time a year ago.  Average days on the market to sell a home dropped from 64 days in the 3rd quarter of 2017 to 53 days in the 3rd quarter of 2018.  The shorter selling time is an indication that demand from home buyers is strong.  The year over year average sale price/listing ratio, which measures how much a home sells for compared to it's listing price, went down just slightly in the 3rd quarter of this year dropping from the 97.88% in the 3rd quarter of last year to 97.82% in the 3rd quarter of this year. This high sale price/listing price ratio again confirms that we are in fact in a seller's market with sellers getting  about 2% under asking price.  Not too bad if you are a seller!  Finally, distressed sales in Tallahassee (short sales and foreclosures) as a percentage of total sales, dropped down in the 3rd quarter to the lowest level that I have seen since before the housing market collapsed back in 2007.  Distressed sales only made up 2% of overall sales in the 3rd quarter of this year.  This is down from 3.6% in the 3rd quarter of 2017. If you are an investor with lots of cash burning a hole in your pocket, you probably miss the days when distressed sales made up nearly 30% of properties and people could not give their properties away!  Today's market is definitely not a good market for investors looking to capitalize on buying distressed sales at a discount.  The good deals on investment properties are now far and few between.  Overall I think that our real estate market is in the process of transitioning from a seller's market to more of a normal market that will be about equally favorable for buyers and sellers.  Prices are still going up, but as housing inventory continues to grow, we will see prices start to soften and level out within the next year or two as sellers have to compete with more homes in order to get their homes sold.  Also, rising interest rates will probably have a modest affect on home sales causing home sales to stay about the same or go down a little bit. The market is certainly not going to drop off the cliff like in 2007.  It's just going to be a gradual leveling out.  If you are a home buyer this means you will have more choices of homes, and you won't feel as much pressure to move so quickly or to over pay to get the house you want.   If you are a seller, it means that you are going to have to make your home nice and presentable and price it competitively and in line with what other comparable homes are selling for.  I do think that 2019 will still be a seller's market here in Tallahassee, but by 2020 I think we will be in more of a balanced market.   For a list of the the real estate metrics for Tallahassee as a whole as well as for each quadrant of Tallahassee, please see below.  Tallahassee as a whole Listings increased by 16% (1,635 Homes listed for sale) Sales decreased by 1.5% (1,175 properties sold)  Average sale price Increased by 9.1% (Average sale price was $226,290) Average Sale price/list price ratio decreased by 0.06% (97.82%) Average days on the market to sell decreased by 17.2% (53 days on the market before selling)  Proportion of distressed sales to total sales decreased by 1.6% (distressed sales made up 2% of total sales)    Northeast Tallahassee   Listings increased by 12.6% (814 properties listed for sale)  Sales Increased by 1.6% (576 properties sold) Average price increased by 9.2% (Average price was $305,498) Sale price/list price ratio decreased by 0.08% (average sale price/list ratio was 97.76%) Average days on the market decreased by 12.7% (48 days on the market on average before selling)  The proportion of distressed sales to total sales decreased by 0.2% (distressed sales made up 1.4% of total sales)    Northwest Tallahassee Listings increased by 14.9% (448 properties listed for sale)  Sales decreased by 1.4% ( 352 properties sold)  Average sale price increased by 1.1% (average sale price was $137,999)  Average sale price/list price ratio decreased by 0.2% (Average sale price/list price ratio was 97.83%) Average days on the market before selling went down 10.4% (60 days on the market on average before a home sold)  The proportion of distressed sales compared to total sales decreased by 2.7% (distressed sales made up 2.6% of total sales)  Southeast Tallahassee   Listings Increased by 26.6% (262 properties listed for sale) Sales decreased 9.4% (173 properties sold)  Average price increased by 10% (Average sale price was $189,586) Average sale price/list price ratio increased by 0.24% (sale price/list price ratio was 98.32%)  Average days on the market before a home sold decreased by 20% (56 days)  The proportion of distressed sales compared to total sales decreased by 2.4% (distressed sales made up 2.3% of total sales)   Southwest Tallahassee Listings increased by 23% (111 properties listed for sale)  Sales decreased by 6.3% ( 74 properties sold)  Average sales price increased by 23.9% (Average sale price was $115,535)  Average sale price/listing price ratio increased by 0.36% ( Average sale price/listing price ratio was 97.10%)  Average days on the market before a property sold decreased by 41.6% ( 59 days)  The proportion of distressed sales compared to total sales decreased by 4.9% (distressed sales made up 2.7% of total sales)

Tallahassee 1st Quarter Real Estate Market Report

Bobby's Real Estate Column

1st Quarter 2018 Tallahassee Residential Real Estate Market Snapshot And Year Over Year Market Statistics. The residential real estate market in Tallahassee in the first quarter of 2018 took off like a rocket with both the number of properties sold and home prices seeing huge gains compared to the first quarter of 2017.  While we saw home prices and the number of properties sold go up, the number of properties available for sale went down.  Shrinking levels of housing inventory is a trend we have consistently seen over the past two or three years, and that trend continued in the first quarter of this year.  The combination of increasing demand for homes and a decreased level of housing supply to meet the growing demand, has created a fiercely competitive seller's market where homes are flying off the market quickly and at prices we have not seen in over a decade.  This combination of increasing demand for homes and shrinking supply of homes has led to a significant drop in the average time it took a home to sell in the first quarter of 2018 compared to the same time a year earlier.  The average sale price/list price ratio, which measures how much a home sells for compared to it's listing price, went down very slightly in the first quarter of  2018 from the first quarter of 2017.  Last but not least, distressed sales (foreclosures and short sales) continued to make up a smaller percentage of overall sales.  Distressed sales typically sell at a discount compared to homes that are not distressed, and they bring down the values of surrounding properties.  The decreasing levels of distressed sales is a consistent trend we have seen since 2012 when the housing market began it's recovery.    The number of properties listed for sale was down 1.5% in the first quarter of 2018 compared to the first quarter of 2017.  The number of homes that sold in the first quarter of 2018 increased by a whopping 11.9% compared to the first quarter of 2017.  An improving economy and a coming of age of the millennial generation,  who many are now deciding to purchase their first home, caused a boom in home sales in the first quarter of 2018.  Unfortunately, the boom in demand for homes has been met with a shrinking level of homes to choose from.  The lack of adequate housing inventory is a long term issue in my view, and it could take years before inventory levels reach normal levels.  Years of inadequate construction of new homes following the housing bust combined with the fact that people are staying in their homes longer are the main two causes of the shortage of available homes for sale.   Home prices rose 8.6% in Tallahassee in the first quarter of 2018 compared to the first quarter of 2017.  Historically, homes have increased by about 3%-5% per year, so the 8.6% year over year increase we saw in Tallahassee in the first quarter of this year was well above what would be considered average.  This is of course great news for homeowners looking to sell their homes.  The rapidly increasing home prices are making purchasing a home much tougher for home buyers though since increases in home prices are far out outpacing increases in people's wages.  When you also factor in increasing mortgage rates on top of increasing home prices, the cost of owning a home has gone up quite a bit over the last year.   The average amount of time it took a home to sell in the first quarter of 2018 went down a whopping 24.4% compared to the first quarter of 2017.  On average it only took 68 days for a home to sell in the first quarter of 2018 compared to 90 days in the first quarter of 2017.  The reason for this is simple.  Fewer homes available for sale combined with an increased demand for homes is causing homes to sell much quicker than last year.   The average sale price/listing price ratio, which measures the average of what homes are selling for compared to what they are listed for, remained flat for the most part going down only very slightly. In the first quarter of 2018 the average sale price/listing price ratio was 97.69% compared to 97.89% in the first quarter of 2017.  This means that in the first quarter of 2018 the average home sold for 97.69% of the asking price.  This high sale price/listing price ratio confirms that we are in a seller's market.  Distressed sales only made up 4% of total sales in Tallahassee in the first quarter of 2018.  This is down from the first quarter of 2017 when distressed sales made up 6.3% of total sales.  As mentioned earlier, fewer distressed sales is indicative of the fact that the real estate market and the economy as a whole are improving, and is also a good indication that home prices will continue to increase for the foreseeable future.    Overall, the real estate market here in Tallahassee is very robust with lots of activity.  Despite the very low levels of housing inventory available for sale, home sales have continued to increase sharply.  If we had more homes available for sale, home sales would probably be even higher.  The only aspect of our local housing market that could be considered bad is the lack of homes available for sale.  don't expect this problem to go away anytime time soon.  We need a boom in new housing construction to provide the needed supply of homes to meet the growing demand of home buyers.  A shortage of land to build on combined with increasing construction costs and a shortage of construction labor is making it tough for builders to build homes...especially homes in the lower price ranges which is where the biggest shortage of homes exists.    In the year ahead I would expect demand for homes to continue to grow as the economy improves and more and more people begin to feel the extra income from the tax cut legislation that passed in December of 2017.  I expect inventory of homes to remain well below adequate levels.  I would also expect to see interest rates on home loans increase throughout the end of the year.  I think we could expect the average rate on a 30 year fixed rate mortgage to rise to 5% by year end.  If you are a home buyer I would not delay making a purchase if you are in the market.  Affordability will continue to get worse for the foreseeable future.  If you are a home seller, now is a great time to sell your home.  If you price your home right and you get it in great condition so it shows well, you will sell it for good money and quickly.   For a list of the the real estate metrics for Tallahassee as a whole as well as for each quadrant of Tallahassee, please see below.  Tallahassee as a whole Listings decreased by 1.5% (1,562 Homes listed for sale) Sales increased by 11.9% (977 properties sold)  Average sale price increased by 8.6% (Average sale price was $212,967) Average Sale price/list price ratio decreased by 0.2% (97.69%) Average days on the market to sell decreased by 24.4% (68 days on the market before selling)  Proportion of distressed sales to total sales decreased by 2.3% (distressed sales made up 4% of total sales)    Northeast Tallahassee   Listings increased by 2.2% (780 properties listed for sale)  Sales increased by 15.5% (491 properties sold) Average price increased by 0.4% (Average price was $266,783) Sale price/list price ratio decreased by 0.58% (average sale price/list ratio was 97.76%) Average days on the market decreased by 30% (57 days on the market on average before selling)  The proportion of distressed sales to total sales increased by 0.2% (distressed sales made up 2.6% of total sales)    Northwest Tallahassee Listings decreased by 12.5% (441 properties listed for sale)  Sales increased by 12.6% ( 268 properties sold)  Average sale price increased by 14.4% ( average sale price was just  $150,288)  Average sale price/list price ratio increased by 0.46% (Average sale price/list price ratio was 97.76%) Average days on the market before selling went down 31.5% (76 days on the market on average before a home sold)  The proportion of distressed sales compared to total sales decreased by 3.2% (distressed sales made up 5.6% of total sales)  Southeast Tallahassee   Listings Increased by 8.8% (236 properties listed for sale) Sales increased by 2.1% (144 properties sold)  Average price increased by 42.7% (Average sale price was $201,109) Average sale price/list price ratio decreased by 0.12% (sale price/list price ratio was 97.77%)  Average days on the market before a home sold decreased by 6.3% (74 days)  The proportion of distressed sales compared to total sales decreased by 7.1% (distressed sales made up 4.2% of total sales)   Southwest Tallahassee Listings increased by 7.9% (109 properties listed for sale)  Sales increased by 7.2% ( 74 properties sold)  Average sales price increased by 26.1% (Average sale price was $105,964)  Average sale price/listing price ratio increased by 3.11% ( Average sale price/listing price ratio was 95.83%)  Average days on the market before a property sold decreased by 7.9% ( 93 days)  The proportion of distressed sales compared to total sales decreased by 4.8% (distressed sales made up 6.8% of total sales)

4th Quarter Tallahassee Residential Real Estate Market Report

4th Quarter 2017 Tallahassee Residential Real Estate Market Snapshot And Year Over Year Market Statistics.

The residential real estate market in Tallahassee continued the same trends in the 4th quarter of 2017 as it did in the previous 3 quarters of the year. There was one noticeable difference though in the 4th quarter from the rest of the previous quarters of 2017.  The number of properties sold actually went down slightly in the 4th quarter of 2017 compared to the 4th quarter of 2016.  In the previous quarters in 2017 year over year sales were slightly up, but in the 4th quarter, year over year sales went down. 

Besides the number of properties sold though, in the 4th quarter of 2017 all of the other metrics continued to trend in the same direction as we have seen over the last year.  The number of properties listed for sale went down and home prices continued to go up.  The number of days on average it took to sell a property went down.  The sale price/list price ratio (how much a home actually sells for compared to the price the home is listed for sale at) went up, which means homes are selling closer to their asking price.  Finally, distressed sales (foreclosures and short sales) continued to make up a smaller percentage of our total sales.  

The number of properties listed for sale (i.e. the number of homes available for sale on the market) continued to shrink the the 4th quarter of 2017 giving home buyers fewer homes to choose from compared to the same time a year earlier.  We saw the number of homes available for sale drop 2.1% in the 4th quarter of 2017 compared to the same time a year earlier.  As the number of homes available for sale continues to drop it's making it harder and harder for home buyers to find the right property in a reasonable time frame.  Because of this, it seems that some home buyers are starting to hold off buying because they don't have much to choose from.  This seems to be leading to decreased home sales. 

Home sales decreased by 1.1% in the 4th quarter of 2017 compared to the 4th quarter of 2016.  This is only a very small drop, so I don't think it's anything to worry a lot about.  The economy has been improving with jobs increasing rapidly.  People's wages are going up and consumer confidence is strong.  Given the positive economic circumstances you would think that home sales would go up, and normally they would.  The problem is that the supply of homes available for sale is not large enough to meet the growing demand for homes. As a result, many would-be home buyers are continuing to rent since the supply of homes for sale is so small.  

Despite the slight year over year dip in the number of homes sold in the 4th quarter of 2017, year over year home prices continued to modestly increase in the 4th quarter of 2017.  Home prices saw an increase of 2.4% in Tallahassee in the 4th quarter of 2017 compared to the same time period a year earlier.  This is slightly below the rate of increase that we saw in the earlier quarters of 2017, but it's still a healthy rate of growth when we you look at historical rates of price appreciation in the housing market. 

The average number of days it took for a house to sell in the 4th quarter of 2017 went down by 16.7%  going down from 84 days in the 4th quarter of 2016 to only 70 days in the 4th quarter of 2017.  The decrease in the number of homes available for sale is most likely the main reason for the decrease in the number of days it took a home to sell in the 4th quarter of 2017.  This is great news if you are looking to sell your home. 

The sale price/listing price ratio  also went up slightly in the 4th quarter of 2017 compared to the 4th quarter of 2016.  In the 4th quarter of 2017 homes in Tallahassee on average sold for 97.95% of their asking price.  In the 4th quarter of 2016 homes sold for only 97.33% of their asking price.  This very high sale price to listing price ratio is indicative of the fact that we are in a very strong seller's market.  

Finally, distressed sales (foreclosures and short sales) in the 4th quarter of 2017 made up a smaller percentage of overall sales compared to 4th quarter of 2016.  In the 4th quarter of 2017, distressed sales made up only 5% of overall sales compared to 7.9% in the 4th quarter of 2016.  This year over year reduction in distressed sales in the 4th quarter of 2017 is a continuation of a long trend starting in 2012 of a declining number of distressed sales.  Distressed sales generally sell at a discount compared to homes that are not distressed, and they tend to bring down property values of surrounding properties.  The continued reduction in the number of distressed sales that we saw in the 4th quarter of 2017 is an indication that our real estate market is getting stronger, and will lead to more long term price stability.  

Overall, demand for housing is very strong. An improving economy along with increasing jobs and wages seems to be fueling home buyer demand. Young first time home buyers are starting to make up a larger share of the home buyer market as well.  The limited supply of housing inventory is constraining the number of home sales though, and many would-be home buyers are opting to rent instead of buying. 

Over the next year I would expect housing inventory to remain scarce.  I would also expect to see interest rates on home loans rise.  The raising of interest rates and the lack of housing inventory will probably slow down price appreciation a little bit compared to what we have seen over the last couple of years. It might also slow down the number of homes sold as well.  The housing market will be robust this year though, and homes that are priced right and show well will continue to sell very fast.  

For a list of the the real estate metrics for Tallahassee as a whole as well as for each quadrant of Tallahassee, please see below. 

Tallahassee as a whole

• Listings decreased by 2.1% (1,050 Homes listed for sale)

• Sales decreased by 1.1% (884 properties sold) 

• Average sale price increased by 2.4% (Average sale price was $209,829)

• Average Sale price/list price ratio increased by 0.62% (97.95%)

• Average days on the market to sell decreased by 16.7% (70 days on the market before selling) 

• Proportion of distressed sales to total sales decreased by 2.9% (distressed sales made up 5% of total sales) 

 

Northeast Tallahassee

 

• Listings increased by 9.7% (520properties listed for sale) 

• Sales increased by 3.9% (449 properties sold)

• Average price decreased 1.6% (Average price was $266,369)

• Sale price/list price ratio increased by 0.74% (average sale price/list ratio was 98.2%)

• Average days on the market decreased by 17.6% (61 days on the market on average before selling) 

• The proportion of distressed sales to total sales decreased by 2.5% (distressed sales made up 3.1% of total sales) 

 

Northwest Tallahassee

• Listings decreased by 1% (289 properties listed for sale) 

• Sales decreased by 5.2% ( 239 properties sold) 

• Average sale price increased by 5.5% ( average sale price was just  $140,270) 

• Average sale price/list price ratio increased by 1.05% (Average sale price/list price ratio was 97.62%)

• Average days on the market before selling went down 15.8% (75 days on the market on average before a home sold) 

• The proportion of distressed sales compared to total sales decreased by 3.7% (distressed sales made up 4.6% of total sales) 

Southeast Tallahassee

 

• Listings decreased by 6.6% (169 properties listed for sale)

• Sales increased by 2.1% (143 properties sold) 

• Average price increased by 1.5% (Average sale price was $171,115)

• Average sale price/list price ratio increased by 0.14% (sale price/list price ratio was 97.91%) 

• Average days on the market before a home sold decreased by 15.8% (74 days) 

• The proportion of distressed sales compared to total sales increased by 2% (distressed sales made up 8.4% of total sales)  

Southwest Tallahassee

• Listings decreased by 6.1% (77 properties listed for sale) 

• Sales decreased by 25.7% ( 52 properties sold) 
• Average sales price increased by 7.1% (Average sale price was $109,914) 

• Average sale price/listing price ratio decreased by 2.27% ( Average sale price/listing price ratio was 94.9%) 

• Average days on the market before a property sold decreased by 24.2% ( 91 days) 

• The proportion of distressed sales compared to total sales decreased by 10.8% (distressed sales made up 13.5% of total sales)