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
Southwest 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)
- 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)
