Full 3rd Quarter Tallahassee Residential Real Estate Market Report

Today I will be giving you an update on the current condition of Tallahassee's real estate market. Once again I have taken the liberty of doing some research, and using the Tallahassee Board of Realtors Multiple Listing Service statistics, I have pulled and analyzed some very useful data that I will be using here today to give you an idea of how Tallahassee's residential real estate market is doing. In my research I made year to year comparisons covering and comparing the third quarter of 2011 to the third quarter of 2012.. To make my data as meaningful as possible, I divided properties by both price range and location. I divided the properties up into 5 different price ranges and 4 different areas of Leon County. In my research I looked up the number of homes listed for sale during those time periods, the number of homes sold in those time periods, the average sale price of the homes that sold in those time periods, the average number of days it took for a home to sell in those time periods, and the sale price to list price ratio (this is the average percentage of what a home sold for compared to what it was listed for sale at). I also looked at what I call the "distressed sales/total sales ratio" This ratio is the number of distressed sales (foreclosures and short sales) divided by the total number of  total sales. This figure is important because the higher this ratio is the more downward pressure on home prices there will be. Below is a summary of the data that I found. I have categorized the data by price range and location as well as for Tallahassee as a whole.

Year over Year Market Statistics for Tallahassee As A Whole

• 3.6 % increase in the number of properties listed for sale (1008)
• 4.4% increase in the number of properties sold (684)
• 3.1% decrease in the average sales price ( average home price in 3rd qtr 2012 was $172,629)
• 1.53% increase in the average sale price/list price ratio ( 96.04%)
• 8.7% decrease in the number of days it took a property to sell for on average (126 days)
• 4.9% increase in the distressed sales/total sales ratio (23.1% of all sales were distressed sales in 3rd Qtr. of 2012).

Summary of Tallahassee Real Estate Market as a Whole

Overall the fundamental health of the real estate market in Tallahassee is good.  The Tallahassee real estate market for single family residential property showed signs of improvement by most measures.  Both the number of properties sold as well as the number of properties listed for sale increased.  Also, the average sale price/list price ratio went up slightly which means that single family residential properties sold for an amount closer to their listing price than compared to the same time a year earlier.  In addition to this, the average number of days it took to sell a property that sold in the third quarter of 2012 decreased by 8.7% from the same time a year ago which is a sign of improvement in our real estate market.  To sum up all of the improvements that we saw in the third quarter of 2012, we basically saw both listings and sales increase, the average amount of time it took for a home to sell went down, and homes are now selling closer to their list prices.

While Tallahassee's real estate market seems to be improving, it appears that distressed sales (foreclosures and short sales) are still holding prices down in Tallahassee.  During the third quarter of 2012, 23.1% of total sales were distressed sales. That's up for 18.2% during the same time period a year earlier.  Distressed sales typically sell at a discount compared to non-distressed sales so this means that they bring down the value of nearby properties.  With distressed sales increasing to nearly a quarter of sales in the third quarter of 2012, it's no surprise that the average sales price of homes in Tallahassee decreased in the the 3rd quarter of 2012 down from the same time period a year earlier.

It is worth noting that price declines took place mostly in homes in the $250,000 and below price ranges.  Homes in the $250,001 and up price ranges actually saw increases in their average prices.  The reason that Tallahassee's market as a whole saw a year over year decrease in average sale price in the third quarter is because the vast majority of properties that sell in Tallahassee are $250,000 and below.  

The fact that price declines have taken place in the lower price ranges and not in the higher price ranges makes perfect sense though.  Distressed sales make up a much larger proportion of the total sales in the properties that sold for $250,000 and below.  This means that distressed sales are keeping prices suppressed in these lower price ranges.  Once you get into the $250,001 and up price ranges though, distressed sales start to account for a much smaller percentage of total sales.  This means that distressed sales are not suppressing home prices for homes priced $250,001 and up to nearly the extent that they are in the $250,000 price ranges.  This is most likely why selling prices of homes n the upper price ranges are going up.

Looking forward, it appears that distressed sales are going to continue to account for a large percentage of home sales in Tallahassee.  The long and drawn out judicial process we have for foreclosures here in Florida has slowed down, and continues to slow down, the rate at which these foreclosure properties are released onto the market.  This means that getting rid of all of the foreclosure properties that banks own in Tallahassee is going to be a long and drawn out process.  Unfortunately our local real estate market will not be able to fully recover until most of these distressed sales are sold.  

If we continue on the same rate we are going now, I expect that distressed sales will probably shrink down to an amount that is small enough to where our real estate market will start to see price increases across the board in all of the price ranges.  Of course, if congress fails to resolve the fiscal cliff issue or if taxes are raised on people who make $250,000 and up ($200.000 and up for single individuals) as some in congress are proposing, our economy as a whole could get worse.  This would also slow the recovery of our real estate market and keep prices down.  This is because many of the people who are buying these distressed sales are wealthy investors who make more than $250,000 ($200,000 if single) a year.  If their taxes are increased they will be less likely to purchase distressed properties because they will have less money to do so.  This means distressed properties will linger on the market longer which will prolong the real estate recovery.  

Year Over Year Market Statistics for the $0-$125,000 price range.  

Northeast Tallahassee

• 4.4% increase in the number of properties listed for sale (65)
• 4.1% decrease in the number of properties sold (46)
• 5.1% increase in the average sales price ($94,883)
• 3.38% increase in the average sales price/list price ratio. (93.61%)
• 13.6% increase in the average number of days it took to sell a home (142 days)
• 24.5% increase in the distressed sales/total sales ratio.  (37% of the homes sold were distressed sales)

Northwest Tallahassee

• 1.1% decrease in the number of properties listed for sale (179)
• 16% increase in the number of properties sold (130)
• 1.8% decrease in the average sales price ($77,071)
• 1.57% decrease in the average sales price/list price ratio (93.69%)
• 1.96% decrease in the average number of days it took to sell a home (150 days)
• 0.9% decrease in the distressed sales/total sales ratio (27.7% of total sales were distressed sales)

Southeast Tallahassee

• 14% decrease in the number of properties listed for sale.( 74)  
• 32.4% decrease in the number of properties sold (46)
• 9.7% increase in the average sales price ($79,522)
• 5.05% increase in the average sales price/list price ratio (95.81%)
• 21.5% decrease in the average number of days that it took to sell a property (139 days)
• 8.6% decrease in the distressed sales/total sales ratio (32.6% of total sales were distressed sales)

Southwest Tallahassee

• No change in the number of properties listed for sale (59)
• 24% increase in the number of properties sold (41)
• 27.4 % decrease in the average sales price ($44,316)
• 1.46% increase in the sales price/list price ratio (92.4%)
• 35.3% decrease in the number of days that it took to sell a house. (99 days)  
• 0.6% increase in the distressed sales/total sales ratio (36.6% of total sales were distressed sales)

Summary of the market for the $0-$125,000 price range

Overall it seems that the market for homes in the Tallahassee that are under $125,000 is improving.  This price range seems to be the price range that is most driven, thus most impacted, by foreclosures and short sales (distressed sales).  33.6% of total sales in this price range were distressed sales.  This is about 10% more than the average for Tallahassee as a whole. In this price range, the distressed sales/total sales ratio went up in the 3rd quarter of 2012 about 3.7% from the same time period a year earlier.  The number of properties listed for sale in this price range has come down in the third quarter of 2012.  At the same time the number of properties sold in this price range in the third quarter of 2012 inched up.  With listings down and sales up, supply and demand is headed in a healthy direction, that if it continues on the same direction, will lead us back to price gains in this particular price range. A couple other positive signs for the $125,000 and below market is that the average sales price/list price ratio edged up a little bit and the average number of days it took to sell a property has come down some.  This means that properties are selling for closer to their listing price and it's talking less time on average to sell properties in this price range.  

One negative sign that we saw in this price range during the third quarter of 2012 is that the average sales price is slightly down.  With the distressed sales/total sales ratio going up though, this is not that much of a surprise.  The increase in the proportion of distressed sales compared to total sales is holding the prices of homes in this price range down.  This is because distressed sales typically sell at a discount compared to non-distressed sales which brings the value of surrounding properties down.  The proportion of distressed sales compared to total sales will most likely continue to increase in the near future.  This will probably keep the prices of properties in this price range suppressed.  However, due to the laws of supply and demand, the trend that we are seeing of the shrinking amount of housing inventory will eventually lead us to price gains again in this price range.  How soon is the big question.  Inventory has been shrinking in this price range for a couple years now, and we still have not seen prices increase yet.

Year Over Year Market Statistics for the $125,001-$250,000 Price Range

Northeast Tallahassee

• 6.5% increase in the number of listings (263)
• 10.4% increase in the number of properties sold (201)
• 0.6% decrease in the average sales price ($186,623)
•  0.22% decrease in the average sales price/list price ratio (96.41%)
• 3.5% increase in the average number of days it took to sell a property (119 days)
• 4.6% increase in the distressed sales/total sales ratio (18.9% of total sales were distressed sales)

Northwest Tallahassee

• 17.4% increase in the number of properties listed for sale (74)
• 14% decrease in the number of properties sold (43)
• 6.1% decrease in the average sales price ($155,188)
• 1.25% decrease in the average sales price/list price ratio (97.74%)
• 17.1% decrease in the average number of days it took to sell a property (126 days)
• 11% increase in the distressed sales/total sales ratio (21% of total sales were distressed sales)

Southeast Tallahassee

• 36% increase in the number of properties listed for sale (53)
• 5.9% increase in the number of properties sold.(36)
• 4.82% decrease in the average sales price ($165,455)
• 1.25% increase in the average sales price/list price ratio (97.48%)
• 11.4% decrease in the average number of days it took to sell a property( 117 days)
• 16% increase in the distressed sales/total sales ratio( 27.8% of total sales were distressed sales)

Southwest Tallahassee

• 50% decrease in the number of properties listed for sale (7)
• No change in the number of properties sold (6)
• 6.71% increase in the average sale price ($160,445)
• 1.4% decrease in the average sales price/list price ratio (93.02%)
• 11.7% increase in the average number of days it took to sell a property
• 33.3% increase in distressed sales/total sales ratio.( 33.3% of total sales were distressed sales)

Summary of the $125,001-$250,000 price range

Much like the properties in the $0-$125,000 price range, the average price of properties in the $125,001-$250,000 price range have come down slightly in the third quarter of 2012 compared to the same time period a year earlier.  The distressed sales/total sales ratio increased in this price range by 7.7%.  The increase in the distressed sales/total sales ratio is again the most likely reason for the decrease in the average sales price for homes in the price range.  The number of properties listed for sale in this price range did go up slightly though, so this might also have something to do with the decrease in prices.  Per the laws of supply and demand, if you increase the supply then prices will come down.

The total number of properties that sold in this price range did increase.  Also, the average sales price/list price ratio went up slightly as well which means that in the third quarter of 2012 properties in this price range sold for an amount closer to what they were listed for sale at compared to the same time period in 2011.  Finally, there was a slight decrease overall in the number of days on average that it took to sell a property.  

In certain areas of Tallahassee there were some deviations to the market averages in this price range that are worth noting.  First off, northwest Tallahassee saw a 14% drop in the number of properties that sold in this price range.  In southwest Tallahassee there was a 50% decrease in the number of properties listed for sale.  There was also a 6.7% increase in the average sale price for homes in southwest Tallahassee.  

Overall there was more activity in the 3rd quarter of 2012 compared to the third quarter of 2011 for homes in this price range.  Both sales and listings increased year over year.  The market for homes in this price range seems to be improving overall.  The increase in the proportion of distressed sales compared to total sales seems in be holding prices down for homes in this price range though.  This trend will most likely continue into the next year.

Year Over Year Market Statistics for the $250,001-$450,000 Price Range

Northeast Tallahassee

• 26% increase in the number of properties listed for sale (150)
• 11.9% increase in the number of properties that sold (94)
• 1.8% increase in the average sale price($327,327)
• 1.2% increase in the average sale price/list price ratio (96.37%)
• 16.1% decrease in the average number of days it took to sell a property.(99 days)
• 5% increase in the distressed sales/total sales ratio (7.4% of total sales were distressed sales)

Northwest Tallahassee

• 33.3% increase in the number of properties listed for sale (16)
• 166% increase in the number of properties sold (8)
• 10.7% decrease in the average sales price ($314,000)
• 2.12% increase in the average sale price/list price ratio(94.73%)
• 49.2% increase in the average number of days that it took to sell a home (182 days)
• 12.5% increase in the distressed sales/total sales ratio (12.5% of total sales were distressed sales)

Southeast Tallahassee

• 19% decrease in the number of properties listed for sale (17)
• 64% increase in the number of properties sold (18)
• 0.6% increase in the average sales price ($308,755)
• 20.4% increase in the average number of days that it took to sell a property (130 days)
• 1.48% increase in the average sale price/list price ratio (98.02%)
• 12.6% decrease in the distressed sales/total sales ratio (5.6% of total sales were distressed sales

Southwest Tallahassee

• 25% decrease in the number of properties listed for sale
• Sales increased from 0 sales in 3rd quarter 2011 to 2 sales in the 3rd quarter of 2012
• Average sales price in 3rd quarter of 2012 was $349,000
• The average sales price/list price ratio in 3rd quarter 2012 was 96.68%
• In the 3rd quarter of 2012 it took an average of 40 days to sell a property
• There were no distressed sales either year

Summary of the $250,001-$450,000 price range

The vast majority of sales in this price range (about 93%) took place in the northeast and southeast parts of Tallahassee.  Distressed sales accounted for a higher proportion of sales in the third quarter of 2012 compared to the same time period in 2011. Other than that though, all other market indicators for properties in this price range improved in the 3rd quarter of 2012 compared to the third quarter of 2011.  

Both the number of properties listed for sale and the total number of properties sold increased year over year in the third quarter of 2012.  The average sale price/list price ratio for properties in this price range also slightly went up, indicating that homes are selling for an amount that is closer to what he properties are listed for sale at.  The average number of days that it took to sell a property in this price range in the third quarter of 2012 decreased by 9 days on average.  Finally the average sale price for homes in this price range actually increased in the third quarter of 2012 from the same time period a year earlier.  This differs from the trend of Tallahassee's market as a whole which is good news for people who own homes n this price range.  

The increase in prices for homes in this price range actually makes perfect sense though.  The proportion of distressed sales compared to total sales for homes in this price range is much lower than Tallahassee as a whole.  23.1% of total sales were distressed sales for Tallahassee as a whole.  In the $250,001-$450,000 price range though, distressed sales only accounted for 7.4% of total sales.  This means that the number of distressed sales in this price range was not large enough to drive prices down like it was for homes in the lower price ranges.  Again this is good news for people who own homes in this price range.  

In certain areas of Tallahassee we did see some deviations from the overall trend of this price range as a whole.  In northeast Tallahassee homes in this price range decreased while the average number of days it took to sell a home in this price range actually increased.  In the southeast part of Tallahassee, we saw a decrease in the number of properties listed for sale while at the same time we saw an increase in the number of days on average that it took to sell a home.  In southwest Tallahassee, we saw a decrease in the number of properties listed for sale.  

Year Over Year Market Statistics For The $450,001-$750,000 price range.

Northeast Tallahassee

• 26.7% decrease in properties listed for sale (22)
• Total sales stayed the same(11)
• 1.86% increase in the average sale price ($579,545)
• 1.35% increase in the average sales price/list price ratio (94.96%)
• 1.9% increase in the number of days on average that it took to sell a home (109 days)
• 9.1% decrease in the distressed sales/total sales ratio (0% of sales were distressed sales)

Northwest Tallahassee

• Decrease in the number of properties listed for sale from 1 to 0
• Increase in the number of properties sold from 0 to 1
• The home that sold sold for $750,000.
• The home that sold took 401 days to sell
• The home sold for 98.04% of what it was listed for
• There were no distressed sales in the 3rd quarter of either 2011 or 2012.

Southeast Tallahassee

• 16.7 % increase in the number of properties listed for sale (7)
• Sales decreased from 5 sales to 1 sale(1)
• 19.9% decrease in the average sales price ($455,000)
• 1.14% decrease in the average sales price/list price ratio (94.79%)
• 61% increase in the average number of days it took to sell a property (122)
• Distressed sales increase from 0 to 1 (100% of sales were distressed sales)

Southwest Tallahassee

• No Sales or listing activity in either year

Summary of the $450,001-$750,000 price range

The sales and listing activity for homes in this price range was fairly limited overall during the third quarter of 2012.  There were only a total of 28 new properties listed for sale in this price range in all of the third quarter of 2012.  There were also only 13 properties that sold in this price range during the third quarter of 2012.  11 out of 13 properties that sold were in the northeast part of Tallahassee, and 22 out of 28 properties listed for sale were in the northeast part of Tallahassee.  Total sales decreased from 16 to 13 sales from third quarter 2011 to third quarter 2012.  The year over year decrease in sales came from the southeast part of Tallahassee.  The number of properties listed for sale also decreased in this price range in the third quarter of 2012.  Listings decreased in all areas of Tallahassee except in the southwest where there was no listing activity in the third quarter of 2011 or the third quarter of 2012.  

The average sales price for homes in this price range went up by about 2.5% which is a good sign.  However, this is not a big surprise since distressed sales only accounted for 7.7% of total sales in this price range during the third quarter of 2012.  The average number of days it took to sell a homes for homes in this price range in the third quarter of 2012 went up quite a bit from the same time period a year earlier which is not a good sign.  

Overall it seems like the market for homes in this price range is getting better.  While the number of listings and sales are down, prices are up.  Again this is most likely because prices are not being held down by a high number of distressed sales like homes in the lower price ranges are.  As long as the distressed sales/total sales ratio does not go up, the market for homes in this price range should continue to improve.

Year Over Year Market Statistics for the $750,001+ Price Range

Northeast Tallahassee

• 25% increase in the number of properties listed for sale (15)
• Decrease in the number of properties listed for sale from 6 to 0

Northwest Tallahassee

• Listings decreased from 3 listings to 0 listings
• Sales decreased from 1 sold property to 0

Southeast Tallahassee

• Listings decreased from 3 listings to 0 listings
• Sales decreased from 1 sale to 0 sales.

Southwest Tallahassee

• No Sales or Listing activity in either 2011 or 2012 during the 3rd quarter

Summary of The $750,001+ Price Range

Activity in this price range during the 3rd quarter of both 2011 and 2012 was very limited.  There were actually no sales at all in this price range reported during the third quarter of 2012.  This is down from 8 sales during the third quarter of 2011.  There were actually 16 properties listed for sale in this price range during the third quarter of 2012 which was down from 18 properties listed for sale during the same time period a year earlier.  The lack of activity for homes selling in this price range during the third quarter of 2012 most likely has to do with overall price declines in the market as well as the overall trend of people scaling down in home size which the bad economy has forced people to do.