Tallahassee 3rd Quarter Real Estate Market Report

In the 3rd quarter of this year in Leon County we mostly saw a continuation of recent trends in the residential real estate market, but out of the six metrics I looked at, we did see a change in the direction of a couple of the metrics. The changes we saw could be an indication that the market is starting to cool down.  Overall though, the local real estate market is still strong with healthy buyer demand that is supported by a strong economy. 

The number of properties listed for sale continued it's downward trend in the 3rd quarter of this year with fewer properties being listed for sale compared to the 3rd quarter of 2018.  The number of properties sold continued to go up at a healthy pace, indicating that buyer demand for homes is still strong.   Home price appreciation slowed down quite a bit in the 3rd quarter of this year though, with average home prices only going up by a very small amount compared to the 3rd quarter of 2018.    

The average sale price to list price ratio, which measures how much a home sells for relative to it's listing price, went up by only a small amount, and on average it took homes longer to sell in the 3rd quarter of this year compared to last year.  Finally, for the first time in a long time, distressed sales (foreclosures and short sales)  went up and made up a larger percentage of the overall sales compared to the third quarter of last year. 

Let's start off by talking more about what's going on with our housing inventory here locally and the number of properties listed for sale.  As you probably know, we have a shortage of residential properties available for sale here in Leon County and have had a shortage going on for about 3 years now.   In the 3rd quarter of this year, that shortage got worse with the number of properties available for sale going down by 5.8% compared to the 3rd quarter of last year.  We currently have about a 3-4 months supply of housing inventory, meaning that if no properties were listed for sale after today,  all the remaining inventory would sell in 3-4 months.  A normal level of housing inventory is about a 6 months supply.   

This low level of housing inventory is making it tough for home buyers to find properties.  It's taking most home buyers more time to find the right home, and in some cases home buyers have decided to hold off on buying a home because they can't find what they are looking for.  The low housing inventory issue is a complex problem that is not going to go away for some time.  The only way to solve this issue is to build more affordable homes.  A lot more!  Locally, that will be a challenge due to the limited amount of land available for sale to build on, the high cost of city and county permitting fees, strict government regulation, and high cost of building materials and construction labor.  If we had more homes available for sale then we would have higher home sales, but despite the low housing inventory, home sales are still strong. 

Home sales in the 3rd quarter of 2019 saw a year over year increase of 4.6% compared to the same time a year ago.  A strong job market, rising wages,  consumer optimism and low mortgage interest rates are fueling demand for homes.  As long as the economy remains strong, so will home sales.  We just need more homes for people to buy! 

Year over year home prices in Leon County did go up in the 3rd quarter of 2019, but only by a very small amount.  On average, home prices went up by 0.3% compared to the same time last year.  We did see some variation throughout different areas of the county though. Most notably, NE Leon County saw year over year average home prices go down in the 3rd quarter of this year by 2.5% compared to the 3rd quarter of 2018.  In the 3rd quarter of 2018 the average home price in the NE was $306,301 whereas this year it went down to $298,592. I believe this is a correction. Average home prices in the NE part of the county have risen so quickly over the last few years, and now the market is correcting itself.   The other three quadrants of Leon County all saw home prices go up with the NW seeing the biggest year over year price increase at 8.6%.  

The average sale price to list price ratio increased very slightly in the 3rd quarter of this year compared to the 3rd quarter of 2018.  The average sale price to list price ratio measures how much a home sells for compared to it's listing price.  In the 3rd quarter of this year the average sale price to listing price ratio was 98.14% compared to 97.83% in the 3rd quarter of last year.  With homes selling for over 98% of the asking price, it's easy to see we are still in a seller's market.  This is largely due to the low level of housing inventory. 

The average time it took to sell a home in the 3rd quarter of this year was up from a year ago.  On average, homes that sold in the 3rd quarter of this year sat on the market for 64 days before selling.  This is up from 54 days in 2018.  With the low housing inventory and increased buyer demand, it's hard to pinpoint why homes took longer to sell this year on average than they did a  year ago.  

Finally, in the 3rd quarter of this year,  we saw an uptick in distressed sales (foreclosures and short sales) compared to the 3rd quarter of last year.  Distressed sales made up 2.23% of total sales this year compared to only 2.04% in the 3rd quarter of 2018.  This is the first year over year increase in distressed sales I have seen in a very long time.  However, distressed sales still make up a very, very low percentage of overall sales at only 2.23% so I don't think this means we are going to see a wave of distressed properties hit the market.  I think we are now back at a historically normal percentage of distressed sales and the uptick is just a normal fluctuation.  

Again, the real estate market is strong here in Leon County, and it appears it will remain strong for some time to come as long as the overall economy remains strong. I do predict that home prices will probably flat line in the next year.  For a number of years now, home price gains have been outpacing increases in people's wages, and I think now the market is correcting itself.  I think price gains will be flat next year or only go up very slightly.  This trend might go on for the next couple years before we start to see average home prices go up again by any significant amount. 

Interest rates will most likely continue to be low over the next year making it a good time for buyers to lock into a mortgage.  I think one thing that people should pay attention to is the trade deals being made with various countries, and especially with China.  If a trade deal is struck with China this will likely make building materials less expensive and might enable builders to build more homes for less money.  This could help with our housing inventory issues.  If a trade deal is struck with China this will also have other positive effects on the economy such as making the stock market go up which ultimately will increase consumer confidence which is good for housing demand.  If a trade deal is struck and signed into law with Mexico and Canada, this will also have a positive effect on the economy and housing. 

To see all the year over year housing metrics for Leon County as a whole and by each quadrant of Leon County, see below. 

Tallahassee as a whole

• Listings decreased by 5.8% (1587 homes listed for sale) 
• Sales Increased by 4.6% (1239 homes sold)

• Average sale price Increased by 0.3%(Average sale price was $227,778)

• Average Sale price/list price ratio went up by 0.31% (Average Sale price to list price was 98.14%)
• Average days on the market to sell increased by 18.51%  (64 days on the market before selling) 

• Proportion of distressed sales to total sales increased by 0.19%% (distressed sales made up 2.23% of total sales) 

 

Northeast Tallahassee

 

• Listings decreased by 4% (799 properties listed for sale) 

• Sales increased by 3.95% (607 properties sold)

• Average price decreased by 2.5% (Average price was $298,592)

• Sale price/list price ratio increased by 0.55% (average sale price/list ratio was 98.32%)

• Average days on the market increased by 18.75% (57 days on the market on average before selling) 

• The proportion of distressed sales to total sales increased by 0.05% (distressed sales made up 1.49% of total sales) 

 

Northwest Tallahassee

• Listings decreased by 7.4% (435properties listed for sale) 

• Sales increased by 5.9% ( 375 properties sold) 

• Average sale price increased by 8.6% (average sale price was $149,883) 

• Average sale price/list price ratio decreased by 0.43% (Average sale price/list price ratio was 97.41%)

• Average days on the market before selling increased 11.7% (67 days on the market on average before a home sold) 

• The proportion of distressed sales compared to total sales increased by 0.16% (distressed sales made up only 2.7% of total sales) 

Southeast Tallahassee

 

• Listings decreased by 10.1% (240 properties listed for sale)

• Sales increased by 2.9% (177 properties sold) 

• Average price Increased by 6.2% (Average sale price was $201,589

• Average sale price/list price ratio increased by 0.55% (sale price/list price ratio was 98.84%) 

• Average days on the market before a home sold increased by 1.8% (57 days) 

• The proportion of distressed sales compared to total sales increased by 0.03% (distressed sales made up 2.26% of total sales)  

Southwest Tallahassee

• Listings decreased by 2.6% (113 properties listed for sale) 

• Sales increased by 8% ( 81 properties sold) 
• Average sales price increased by 0.72% (Average sale price was $115,828) 

• Average sale price/listing price ratio decreased by 0.78% ( Average sale price/listing price ratio was 96.35%) 

• Average days on the market before the property sold increased by 73% (116 days on the market before selling) 

• The proportion of distressed sales compared to total sales increased by 3.6% (distressed sales made up 6.2% of total sales) 

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Tallahassee 2nd Quarter Real Estate Market Report

The real estate market heated up  quite a bit in Leon county in the 2nd quarter. In the 2nd quarter of 2019, we continued to see strong demand from home buyers with a year over year increase in home sales. At the same time, we also saw a year over year decrease in the already very low supply of homes available for sale.  We also saw a substantial slow down in year over year price appreciation in the 2nd quarter compared to what we have seen the preceding couple of years.  This year in the 2nd quarter, the sale price to listing price ratio, which measures how much a home sells for compared to it's listing price, remained unchanged from last year.  We also saw the average number of days on the market it took a home to sell go up in the 2nd quarter compared to the same time last year.  Finally, distressed sales (foreclosures and short sales) continued to decrease from last year to the lowest level in over a decade. 

Sales were up 5.3% in the 2nd quarter of 2019 compared to the 2nd quarter of 2018.  A strong job market, strong consumer confidence and a strong overall economy continued to fuel strong demand from home buyers in the 2nd quarter of this year.  Low interest rates also likely played a role in the increase in home sales as buyers were able to borrow money at interest rates below 4% on a 30 year mortgage.  

The number of homes on the market for sale continued to decrease in the 2nd quarter. In the 2nd quarter of this year listings were down 1.5% compared to the 2nd quarter of 2018.  We have had a problem with a low supply of homes for about 3 years now, and it has not seemed to get any better.   There is strong demand from home buyers right now, and if we had a higher supply of homes for sale, we would probably have a higher number of home sales than we have been having.  Many would-be home buyers are sitting on the sidelines and continuing to rent because they are not seeing enough options out there for homes.  The buyers that are in the market actively looking for homes are taking a lot longer to find a home on average compared to a few years ago when housing inventory was higher.  I have worked with lots of home buyers over the last couple of years, and it has taken a lot longer than it use to to find them homes that fits their needs. 

Home prices were up in the 2nd quarter of this year compared to last year, but only by a very small margin.  Year over year, home prices were up only 1.1% in Leon County in the 2nd quarter of this year compared to the 2nd quarter of 2018.  This is much lower than over the past couple years.  In 2017 year over year price gains were close to 10%, and in 2018 year over year price gains were around 5%.  My assessment is that because prices have gone up so much over the last 3 or 4 years, far outpacing wage growth, we are now seeing the market adjust in the form of slowing price appreciation which will allow wage growth to catch up with home prices. I think over the next couple years home prices will stay flat because home prices have reached a level where if they go any higher, homes won't be affordable.  If interest rates go up or we have a broader economic slow down, I would not be surprised if we even see a slight dip in home prices over the next year or two.  If we do see a price drop, I think it will be a very small drop that will serve as a market correction.  

The sale price to listing price ratio stayed exactly the same in the 2nd quarter of this year compared to the 2nd quarter of 2018, with the average home selling for 98.47% of the asking price.  This is a very high sale price to listing price ratio, and is an indication that we are in a sellers market.  The low levels of available housing coupled with strong home buyer demand is without any doubt the cause of the very high sale price to listing price ratio.  

It took a little bit longer on average for homes to sell in the 2nd quarter of this year compared to the same time a year ago. In the 2nd quarter of this year, on average, homes sat on the market 7.27% longer compared to the same time a year ago.  In the 2nd quarter of 2019 it took 59 days on average before a home sold compared to only 55 days in the 2nd quarter of 2018.  

Finally, in the 2nd quarter of this year we saw another year over year drop in the number of distressed sales (foreclosures and short sales).  In the 2nd quarter of 2019 distressed sales only made up 1.23% of total sales!  This is down from the 2nd quarter of 2018 when distressed sales accounted for 3.2% of total sales.  This is of course way down from the peak of the foreclosure crisis when distressed sales accounted for nearly 30% of total sales.  Hard to believe the number of distressed sales on the market has gone down so much.  The days of bargain deals on distressed properties are pretty much behind us now. 

Overall the real estate market and the economy are strong.  With the job market being so strong, I think demand from home buyers will continue to be strong for the foreseeable future.  I also think that the supply of homes will continue to remain at below normal levels for quite some time.  Home price gains are slowing down, and I think home prices will stay flat over the next year or two.  This is not a bad thing though.  It's just the market adjusting to allow for people's wages to catch up with the rapid increase in home prices we have seen over the last few years.  I view this as a good thing because it will help increase affordability which is good for the housing market. 

It appears that interest rates are going to remain low for the foreseeable future, so I don't think changes to interest rates are going to be a factor in our housing market in the near future.  I think that the broader economy could possibly weigh in on how the housing market does over the next year or two.  If the issues we are having with trade wars get worse instead of better, this could have an impact on housing due to it having a negative effect on the overall economy.  Besides that though, it appears that all signs are pointing to the housing market staying strong for the foreseeable future.  

Below are the year over year real estate metrics for Leon County as a whole and for each quadrant of Leon County.  

Tallahassee as a whole

• Listings decreased by 1.5% (1973 homes listed for sale) 
• Sales Increased by 5.3% (1377 homes sold)

• Average sale price Increased by 1.1%(Average sale price was $232,199)

• Average Sale price/list price ratio was unchanged at 98.47%
• Average days on the market to sell increased by 7.27%  (59 days on the market before selling) 

• Proportion of distressed sales to total sales decreased by 1.97% (distressed sales made up 1.23% of total sales) 

 

Northeast Tallahassee

 

• Listings decreased by 7.5% (1,016 properties listed for sale) 

• Sales decreased by 3.4% (627 properties sold)

• Average price increased by 2.7% (Average price was $307,288)

• Sale price/list price ratio decreased by 0.9% (average sale price/list ratio was 98.46%)

• Average days on the market decreased by 4% (48 days on the market on average before selling) 

• The proportion of distressed sales to total sales decreased by 1.2% (distressed sales made up 0.8% of total sales) 

 

Northwest Tallahassee

• Listings increased by 5.1% (563 properties listed for sale) 

• Sales increased by 12.9% ( 438 properties sold) 

• Average sale price increased by 13.9% (average sale price was $159,574) 

• Average sale price/list price ratio decreased by 0.07% (Average sale price/list price ratio was 98.09%)

• Average days on the market before selling increased 3.1% (65 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 only 0.9% of total sales) 

Southeast Tallahassee

 

• Listings decreased by 3.2% (272 properties listed for sale)

• Sales increased by 9.2% (224 properties sold) 

• Average price decreased by 3.4% (Average sale price was $209,978

• Average sale price/list price ratio increased by 0.76% (sale price/list price ratio was 99.17%) 

• Average days on the market before a home sold increased by 40% (73 days) 

• The proportion of distressed sales compared to total sales decreased by 1.21% (distressed sales made up 2.2% of total sales)  

Southwest Tallahassee

• Listings increased by 31.1% (122 properties listed for sale) 

• Sales increased by 35.4% ( 88 properties sold) 
• Average sales price increased by 7.3% (Average sale price was $115,223) 

• Average sale price/listing price ratio decreased by 0.97% ( Average sale price/listing price ratio was 98.08%) 

• Average days on the market before the property sold increased by 3% (103 days on the market before selling) 

• The proportion of distressed sales compared to total sales decreased by 5.8% (distressed sales made up 3.4% of total sales) 

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1st Quarter 2019 Tallahassee Residential Real Estate Market Snapshot And Year Over Year Market Statistics.

In the 1st quarter of this year we saw a little bit of a slow down compared to the 1st quarter of 2018.  Both the number of properties listed for sale, and the number of properties sold went down.  After seeing an uptick in the number of properties listed for sale in the previous 3 quarters of 2018, the first quarter of 2019 was the first time in a year that we have seen a year over year drop in the number of properties listed for sale.  With already having a shortage of housing inventory to meet the growing demand for housing in our improving economy, the year over year decrease in the number of homes available for sale that we saw in the first quarter was bad news for home buyers.  We also saw an increase in the average number of days on the market it took to sell a home.  

Despite the slow down in sales and number of listings, year over year home prices continued to climb at a modest pace in the first quarter of 2019.  The average sale price to listing price ratio was basically flat in the first quarter of this year compared to the same time a year ago, going down just slightly.  The average sales price/listing price ratio measures how much a home sells for compared to it's listing price.    

Lastly, distressed sales (foreclosures and short sales), made up a smaller percentage of total sales in the 1st quarter of 2019 compared to the same time period a year prior.  Distressed sales sell at a discount compared to non distressed sales, and they bring down the values of surrounding properties. 

Let's start out by talking more about the number of properties listed for sale.  As mentioned above, the number of properties listed for sale saw a drop in the 1st quarter of 2019 compared to the first quarter of 2018.  Year over year property listings decreased by 1.9% in the first quarter of 2019 which was a reversal of trend from the last 3 quarters of 2018 where we saw the number of listings going up for the first time in several years.  

Over the last few years, we have had a major shortage of homes available for sale to meet the growing demand from home buyers.  The reduction in listing inventory that we saw in the 1st quarter of this year is bad for our real estate market because we are still well below what is considered a normal and balanced level of housing inventory.  Because of this shortage of housing inventory, many would-be home buyers are continuing to rent because they don't feel they can find the home that they want.  It's possible that the 1st quarter of this year was just an anomaly instead of a reversal of a trend of growing inventory levels.  This is something to keep an eye on.  If housing inventory levels start going back up then that is a good thing.  If they continue to go down or remain flat, then it could be bad news for our real estate market in the form of fewer home sales. 

We did see home sales go way down in the first quarter of 2019 compared to the 1st quarter of 2018.  Home sales fell 10.9% in the first quarter of this year compared to 1st quarter of 2018.  This was the worst year over year drop in sales we have had in quite some time.  Lack of available homes for sale is one contributing factor to the drop in home sales.  Also, it's possible that the damage Tallahassee incurred from Hurricane Michael in October could have had a negative impact on home sales in the first 

quarter of this year.  If home sales go back up in the 2nd and subsequent quarters of this year, then it's likely that the 1st quarter slowdown we had earlier this year was just a temporary slow down.  If we see a continuation of decreased year over year sales, then it probably means the slow down is being caused mainly by broader economic conditions such as low inventory levels and/or a trend of more people choosing to rent instead of buying. 

 

Despite the number of listings and the number of sales falling in the first quarter of this year, home prices continued to go up in the 1st quarter of this year in Leon County.  Home prices went up 3.8% in the first quarter of this year compared to the first quarter of 2018.  This rate of increase falls in line with what would be considered a historically normal rate of increase between 3%-5%.  The overall strong economy, with increasing wages, has kept buyer demand for housing strong. This strong demand for housing is one of the big factors contributing to home values continuing to rise.  Also, the shortage of available housing inventory is the second major contributor to increasing home values.  It's really basic economics that is driving up home prices.  Strong demand for homes coupled with a low supply of homes is a recipe for increasing home prices!  

 

The sale price to listing price ratio was pretty much flat in the 1st quarter of 2019 compared to the first quarter of 2018 with just a very small decrease.  In the first quarter of 2019 the average sale price/listing price ratio was 97.44% which means that on average, homes sold for 97.44% of the listing price.  This is a high sale price/listing price ratio, and it's indicative that we are in a very strong sellers market.   In the first quarter of 2018, the average sale price/listing price ratio was 97.73% which was just slightly higher then it was in the first quarter of this year. 

 

We did see a pretty good size year over year increase in the average number of days it took a home to sell in the first quarter of this year. In the first quarter of this year,  on average it took 75 days on the market before a home went under contract.  This is up from 67 days in the first quarter of 2018.  Most likely it's the increasing home prices that are causing homes to sit on the market longer than they did last year.  With the decrease in sales, it's clear there are fewer people buying homes this year than last year.  With the higher prices and fewer number of people buying homes this year, it's only natural that homes would be sitting on the market a little bit longer this year than last year. 

 

Distressed sales made up a smaller percentage of total sales in the first quarter of 2019 compared to the same time a year ago.  Again, distressed sales are short sales and foreclosures.  They typically sell at a discount compared to non-distressed sales.  Distressed sales only made up 2% of total sales in the first quarter of 2019 which is down from 4% in the first quarter of 2018.  Fewer distressed sales is good for helping to ensure that home prices continue to go up. 

 

Overall, we had a bit of a slow first quarter this year, but no indications of any serious issues with our real estate market.  It is very possible that the slow down can be partly attributed to the damage that many homes incurred from Hurricane Michael in October 2018.  Many homes in Tallahassee suffered damage from Hurricane Michael and plans for people listing their homes for sale could have been delayed because of the damage.   Whether it was Hurricane Michael that caused the slow down or whether it was other broader economic factors such as increasing home prices, it does seem that the slow down we saw in the first quarter will be short lived.  The 2nd quarter thus far has been very busy, so things seem to be picking back up.  I think the remainder of the year we will see home sales at about the same pace we saw in 2018 or possibly just slightly less.  

 

The problem we are having with low levels of housing inventory will most likely continue to persist for the remainder of the year and even beyond.  As i've said before, I think the problem we are having with low levels of housing inventory is a long term issue that won't easily or quickly be resolved.  New construction prices are being driven up by a scarcity of land to build on, high permitting fees from the city and county, increasing construction material costs and a small and largely under-skilled pool of construction labor.  Until the price of new construction homes comes down, I think we will see both inventory levels and home sales lower than they should be.  

 

One thing I would pay attention to this year is the overall economy and trade deals with other countries...especially China.   Currently the economy is doing good and jobs and wages are increasing.  We have some trade negotiations that are underway right now, and if these trade deals get worked out it could cause construction material prices to go down some and help ease the high costs of new construction homes.  If we get a trade deal worked out with China, it will help the real estate market and the overall economy by reducing costs of goods and services and boosting consumer confidence.  Higher consumer confidence equals more people buying homes!  

 

I would also pay attention to interest rates. Interest rates have continued to stay low.  They will most likely remain low throughout the rest of the year, but if they do start going up, this could curb home sales.  

 

To see a list of the real estate metrics I compiled for Leon County as a whole as well as by  individual quadrant, see below. 

 

Tallahassee as a whole.  

• Listings decreased by 1.9% (1,570 Homes listed for sale

• Sales decreased by 10.9% (876 properties sold)

• Average sale price Increased by 3.8% (Average sale price was $226,614)

• Average Sale price/list price ratio decreased by 0.29% (97.44%)

• Average days on the market to sell increased by 12% (75 days on the market before selling) 

• Proportion of distressed sales to total sales decreased by 2% (distressed sales made up 2% of total sales) 

 

Northeast Tallahassee

 

• Listings decreased by 4.7% (755 properties listed for sale) 

• Sales decreased by 18.7% (399 properties sold)

• Average price increased by 10.5% (Average price was $294,880)

• Sale price/list price ratio decreased by 0.26% (average sale price/list ratio was 97.5%)

• Average days on the market increased by 24.6% (71 days on the market on average before selling) 

• The proportion of distressed sales to total sales decreased by 1.1% (distressed sales made up 1.5% of total sales) 

 

Northwest Tallahassee

• Listings decreased by 2.2% (469 properties listed for sale) 

• Sales increased by 5.5% ( 289 properties sold) 

• Average sale price decreased by 3.9% (average sale price was $144,953) 

• Average sale price/list price ratio decreased by 1.5% (Average sale price/list price ratio was 96.49%)

• Average days on the market before selling increased 12% (84 days on the market on average before a home sold) 

• The proportion of distressed sales compared to total sales decreased by 4.1% (distressed sales made up only 1.4% of total sales) 

Southeast Tallahassee

 

• Listings decreased by 2.1% (234 properties listed for sale)

• Sales decreased 5.5% (136 properties sold) 

• Average price increased by 3.8% (Average sale price was $208,763)

• Average sale price/list price ratio increased by 1.35% (sale price/list price ratio was 99.12%) 

• Average days on the market before a home sold decreased by 18.9% (60 days) 

• The proportion of distressed sales compared to total sales decreased by 0.5% (distressed sales made up 3.7% of total sales)  

Southwest Tallahassee

• Listings increased by 5.8% (112 properties listed for sale) 

• Sales decreased by 29.7% ( 52 properties sold) 
• Average sales price decreased by 0.04% (Average sale price was $105,573) 

• Average sale price/listing price ratio decreased by 0.84% ( Average sale price/listing price ratio was 94.99%) 

• Average days on the market before the property sold increased by 10.8% (103 days on the market before selling) 

• The proportion of distressed sales compared to total sales decreased by 1% (distressed sales made up 5.8% of total sales) 

Tallahassee 4th Quarter Real Estate Market Report

4th Quarter 2018 Tallahassee Residential Real Estate Market Snapshot And Year Over Year Market Statistics.

In the 4th quarter of 2018 Leon County saw the inventory of homes go back down again by a small margin compared to the 4th quarter of 2017.  This is a contrast to the first 3 quarters of 2018 when we saw year over year housing inventory levels go up by substantial margins.  Sales were also down in the 4th quarter of 2018 compared to the 4th quarter of 2017.  Even though both year over year listing and sales activity were down in the 4th quarter of 2018, home prices continued to charge ahead in the last quarter of 2018 going up substantially compared to last quarter of 2017.  

The average number of days on the market it took to sell a home went down in the 4th quarter of 2018 compared to a year earlier.  Also, the average sale price/ listing price ratio of homes was down by a little bit in the 4th quarter of last year compared to the 4th quarter of 2017.  The sale price/listing price ratio measures how much a home sells for compared to the listing price of the home.  Lastly, distressed sales (foreclosures and short sales) continued to go down in the 4th quarter of 2018 making up a lesser percentage of total sales compared to the 4th quarter of 2017.  

As mentioned above, the number of properties listed for sale decreased in the 4th quarter of 2018 compared to the 4th quarter of 2017.  Year over year listings only went down by 3%, but this reversed a trend of 3 straight quarters where we saw rising inventory levels of homes.  Tallahassee's residential real estate market has been plagued with very low levels of housing inventory over the past 3 years, so the year over year decrease in housing inventory that we saw in the 4th quarter of last year is not a good thing.  Buyer demand for houses has been increasing steadily the past several years as the economy has improved and wages have gone up.  Because of this, we need housing inventory levels to go up to meet the growing demand.  If we had more homes for sale, there is no doubt in my mind that home sales would be higher.  Because of the lack of housing inventory to choose from (especially in the lower price range of homes) many would-be home buyers are sitting on the side lines and continuing to rent.  This is no doubt a big factor in why we saw year over year home sales decrease in the 4th quarter of 2018.  It should be noted that the hurricane that hit Tallahassee in October might have caused fewer people to list their homes in the fourth quarter causing the inventory levels to be lower than they would have been had the hurricane not hit Tallahassee. 

Year over year sales of residential real estate decreased by 5.1% in the 4th quarter of 2018 in Leon County.  I believe there are several factors causing the slow down in home sales.  As mentioned above, the lack of homes to choose from has caused many would be buyers to opt to continue to rent instead of buying since they feel like there are not enough options of homes to choose from.  Another reason I believe year over year home sales were down in the 4th quarter is because of the rise in interest rates on home loans.  In the 4th quarter of 2018 interest rates got close to 5% for a 30 year fixed rate mortgage which is about a full percentage point higher than the rates were at the end of 2017.  The higher interest rates combined with rising home prices is making buying a home more expensive, and this is pushing some would-be home buyers out of the housing market. Finally, I believe that the damage incurred throughout Leon County from Hurricane Michael in October also had a dampening effect on home sales in the 4th quarter.    

Even though both the number of properties sold and the number of properties listed for sale went down in the 4th quarter of 2018, year over year home prices went up by a significant margin in the last quarter of 2018.  On average, year over year home prices increased by 8.2% in the last quarter of 2018 in Leon County.  Historically home prices increase by about 3%-5% a year, so this is well above an average level of appreciation for housing.  It should be noted though that different areas of Leon County saw much more appreciation in prices than other parts.  For example, in the Northeast Leon County homes appreciated by a whopping 15.3% while in NW Leon County, home prices actually went down by 5.1%.  In SE Leon County, home prices increased by 2.6% while in SW Leon County home prices went down by a whopping 15.3%.  So most of the appreciation in values was concentrated in the NE part of the county.  This is likely due to the increase in the number of new construction homes that have been selling in NE Tallahassee which has pushed prices up in that part of Leon County. 

The year over year average sale price/listing price ratio of homes went down by 0.29% in the 4th quarter of 2018.  The average sale price/listing price ratio was 97.65% in the last quarter of 2018 compared to 97.94% in the 4th quarter of 2017.  The sale price/listing price ratio measures what a home sells for compared to the asking price of the home.  Even though we saw this metric decrease very slightly in the 4th quarter of 2018, it's still very high by historical standards, and it signifies that we are in a strong seller's market.  The most likely reason we saw this metric go down by a little bit is because average home prices went up by a significant margin. 

Homes sold faster on average in the 4th quarter of 2018 compared to the 4th quarter of 2017.  In fact, in the 4th quarter of last year,  the number of days a home sat on the market before selling decreased by 8.6% compared to a year earlier going from 70 days to 64 days.  The decrease in the number of days it took for a home to sell is a combination of both fewer homes on the market and a strong demand from home buyers.  

Finally, we saw distressed sales (foreclosures and short sales) go down in the 4th quarter of 2018 compared to a year earlier.  Distressed sales only made up 3.21% of all home sales in the 4th quarter of 2018 compared to 5.07% in the 4th quarter of 2017.  We have the lowest amount of distressed on the market now since before the housing market collapsed in 2007.  The decrease in distressed sales is good because distressed sales typically sell at a discount bringing down property values of surrounding properties.  

Overall the real estate market in Leon County is strong and stable.  Home prices continue to go up on average as buyer demand continues to be strong.  We still have less housing inventory than we need, and this has been and will continue to be our real estate market's greatest challenge for some time to come.  The low level of housing inventory for sale is a long term problem I believe caused by an inadequate level of construction of affordable new homes.  The issue is that it's extremely hard to build homes at an affordable price.  Land prices are high, county and city permitting fees are high, construction material costs are high, and there is a shortage of labor in the construction industry.  These problems mentioned above, which make it hard to build affordable homes, are not going to go away any time soon, so because of this I think our problem with a lack of housing inventory for sale is going to be with us for years to come.  

In 2019  I think we can expect interest rates be fairly stable, increasing just slightly.  I also think we will see home prices increase as well but more moderately than we saw in 2018.  I would expect that we will have a robust Spring and Summer selling season here in Tallahassee.  So if you are looking to sell your home this year, I would plan on getting on the market no later than in May so you don't miss out on the selling season.  If you are looking to buy a home this year,  I would start looking now before the market gets red hot between April and June.  If buying a home, you will face lots of competition from other buyers during those peak selling months between April and June. 

Below I have listed all of the metrics for Tallahassee as a whole and for each quadrant of Tallahassee for the 4th quarter of 2018.  

Tallahassee as a whole

• Listings decreased by 3% (1,046 Homes listed for sale

• Sales decreased by 5.1% (841 properties sold)

• Average sale price Increased by 8.2% (Average sale price was $227,064)

• Average Sale price/list price ratio decreased by 0.29% (97.65%)

• Average days on the market to sell decreased by 8.6% (64 days on the market before selling) 

• Proportion of distressed sales to total sales decreased by 1.86% (distressed sales made up 3.21% of total sales) 

 

Northeast Tallahassee

 

• Listings increased by 1.5% (537 properties listed for sale) 

• Sales decreased by 1.6% (426 properties sold)

• Average price increased by 15% (Average price was $306,211)

• Sale price/list price ratio decreased by 0.52% (average sale price/list ratio was 97.67%)

• Average days on the market decreased by 3.3% (59 days on the market on average before selling) 

• The proportion of distressed sales to total sales decreased by 1.7% (distressed sales made up 1.6% of total sales) 

 

Northwest Tallahassee

 

• Listings increased by 7.4% (277 properties listed for sale) 

• Sales decreased by 7.1% ( 223 properties sold) 

• Average sale price decreased by 5.1% (average sale price was $133,045) 

• Average sale price/list price ratio increased by 0.3% (Average sale price/list price ratio was 97.88%)

• Average days on the market before selling went down 14.5% (65 days on the market on average before a home sold) 

• The proportion of distressed sales compared to total sales decreased by 0.6% (distressed sales made up 4% of total sales) 

Southeast Tallahassee

 

• Listings Increased by 3.4% (178 properties listed for sale)

• Sales decreased 7% (133 properties sold) 

• Average price increased by 2.6% (Average sale price was $190,637)

• Average sale price/list price ratio increased by 0.2% (sale price/list price ratio was 98.11%) 

• Average days on the market before a home sold decreased by 17.6% (61 days) 

• The proportion of distressed sales compared to total sales decreased by 4.6% (distressed sales made up 3.8% of total sales)  

Southwest Tallahassee

• Listings decreased by 23% (54 properties listed for sale) 

• Sales increased by 13.5% ( 59 properties sold) 
• Average sales price decreased by 15.3% (Average sale price was $93,067) 

• Average sale price/listing price ratio decreased by 1.12% ( Average sale price/listing price ratio was 94%) 

• Average days on the market before a property sold decreased by 16.2% ( 98 days) 

• The proportion of distressed sales compared to total sales decreased by 3.2% (distressed sales made up 10.2% of total sales)