4th Quarter 2014 Tallahassee's Residential Real Estate Market Update

Tallahassee's real estate market continued to improve and is looking pretty healthy in the 4th quarter of 2014.  The level of inventory available for sale in the 4th quarter of 2014 remained relatively unchanged compared to the same time a year earlier while the number of properties for sale saw a big increase and average prices saw a modest, but by historical standards, a very healthy and sustainable increase.  The average time it took a property to sell in the 4th quarter of 2014 also remained relatively unchanged from a year earlier which indicates that the balance between demand from buyers and supply from sellers has remained pretty steady.  The average sale price to listing price ratio, which is what the average property sells for compared to what it's listed for sale at, also remained relatively unchanged.  This is another supporting indicator that the balance of homebuyers and home sellers has stabilized and has found a steady equilibrium. 

The only statistic that seems a little surprising is the fact that distressed sales (short sales and foreclosure sales) increased in the 4th quarter of 2014 from the same time period a year earlier. Distressed sales typically sell at a discount compared to non distressed sales, and they typically bring down home values of surrounding properties.  If it were not for the increase in distressed sales, it's safe to say that average home prices would have increased more than they did in the 4th quarter of 2014.  This is good news for investors though, because it means there were more good deals on distressed properties to be had than there were a year ago.

It should be noted though that the increase in distressed sales is not an indication that our real estate market is getting worse.  The increase in distressed sales is simply due to the fact that banks are ramping up the sale of the existing inventory of properties that they have on their books.  The amount of properties entering into the beginning stages of foreclosure is way down, and the increase in distressed sales is not an indication that more people are getting foreclosed on, it's just an indication that the banks are more willing and ready to unload their existing housing inventory at a faster pace.  This is actually a good thing, because the quicker we get rid of distressed sale, the quicker we will get to a full recovery from the real estate bust that began in 2007. 

As mentioned above, the inventory level of homes available for sale remained relatively unchanged in the 4th quarter of 2014 from the same time a year earlier.  The number of properties for sale only increased slightly by 0.6% year over year going from 1053 homes listed for sale in 4th quarter of 2013 to 1060 homes listed for sale in the 4th quarter of 2014. 

While the amount of housing inventory for sale stayed about the same in the 4th quarter of 2014, the number of homes sold saw a big increase.  In the 4th quarter of 2014 we saw a 14.8% increase in the number of properties sold compared to the same time period a year earlier.  Sales of residential properties increased in Tallahassee from 709 sales in the 4th quarter of 2013 to 814 sales in the 4th quarter of 2014.  The increase in home sales can most likely be attributed to two main causes.  

First off interest rates saw a pretty big year over year decrease in the 4th quarter of 2014.  In the 4th quarter of 2014 the average rate on a 30 year fixed rate mortgage was hovering around 4% compared to 4.5% in the 4th quarter of 2013. Lower interest rates make buying a home less expensive for people purchasing a home with a mortgage.  This of course can lead to an increased demand for buying homes. 

The second main reason that home sales most likely saw a year over year increase in the 4th quarter of 2014 was because we saw an increase in jobs.  The more people that are employed leads to a bigger pool of potential home buyers which in turn leads to more home sales. 

The average number of days it took for a property to sell remained relatively unchanged.  In the 4th quarter of 2014 it took a property 102 days to sell on average.  In the 4th quarter of 2013 it took a property 101 days to sell on average.

The average sale price/listing price ratio shows what percentage on average a home sells for compared to what it was listed for sale at.  This ratio increased by 0.44% in the 4th quarter of 2014 from the same time period a year prior.  In the 4th quarter of 2014 the average home sold for 96.72% of what the home was listed at compared to 96.28% in the 4th quarter of 2013.  96.72% is a pretty high sale price/listing price ratio , and it shows that buyer demand for homes is very strong right now compared to the level of homes available for sale.  This also indicates that sellers are pricing their homes where they need to be priced at in order to get them sold

The 4th quarter of 2014 also brought about an increase in the number of distressed residential property sales in Tallahassee compared to the same time period a year earlier.  In the 4th quarter of 2014, distressed sales made up 17.94% of total sales compared to only 16.08% in the 4th quarter of 2013.  Due to the fact that distressed sales suppress home values, we probably would have seen a slightly larger increase in average home prices had it not been for the increase in distressed sales.  On the flip side though, if you are a buyer who is searching for good deals on investment properties then this is good news to you because it means that the number of opportunities out there to pick up a good deal on an investment property has gone up. 

Overall, Tallahassee's real estate market is doing good.  Prices are continuing to increase at a healthy rate that is in line with the historical average rate of 3%-5% per year, sales are up, the inventory of homes for sale seems to be at a level that provides buyers with a good number of choices of homes to look at, but at the same time our market is certainly not flooded with too many homes for sale.  Homes are selling pretty quick with it only taking a little bit over 3 months on average for a home to sell. Also, sellers are getting pretty close to their asking prices with the average home selling for 96.72% of what sellers are listing their homes for sale at.  Finally, with an increase in the number of distressed properties being sold, investors who are looking to get good deals on investment properties have more opportunities to find good deals than they did last year.

In the near future look out for a slight increase in interest rates in 2015 as the Federal Reserve is supposed to be increasing the Federal Funds Rate sometime this year which will in turn cause an increase in mortgage rates.  Depending on how abrupt the increase in the mortgage rates are, the increase in mortgage rates could have a dampening effect on home sales and home prices.  Most likely though, the increase in interest rates will be modest, and the overall improvement in the economy will continue to spur home buying and price increases despite the increase in mortgage rates. Another important subject to take note of is the recent decrease in gas prices (which is suppose to be long lasting) will cause more people start buying homes in suburbs and on the outskirts of town due to the cost of commuting going down.  

A snapshot of the year over year real estate metrics for 4th quarter 2014 in Leon County are listed below.

• The number of properties listed for sale increased by 0.6% (1060 properties listed for sale.

• The number of properties that sold increased by 14.8% ( total properties sold was 814)

 

• Average sale price increased by 2.6% (average sale price was $186,077)

 

• Average number of days it took to sell a property increased from 101 days in 4th quarter of 2013 to 102 days in 4th quarter of 2014. 

 

• Average sale price/listing price  ratio increased by 0.44% (average home sold for 96.72% of what it was listed for sale at.

 

• The number of distressed sales expressed as a percentage of total sales increased by 1.86 %.  (17.94% of all home sales were distressed sales)
   

3rd quarter 2014 Tallahassee Real Estate Market Statistics

3rd quarter 2014 Tallahassee Residential Real Estate Market Snapshot And Year Over Year Market Statistics.

After experiencing a setback in the second quarter of 2014, Tallahassee's residential real estate market is back on the rise again in the 3rd quarter of 2014.  Average sales prices are up, the number of properties that sold went up, the number of days on average it took a property to sell went down and the average price a home sold for compared to what it was listed for, went up.  The number of listings on the market did go down a little bit, and also the proportion of distressed sales compared to total sales did go up some.  Overall though Tallahassee's real estate market did very well in the 3rd quarter of 2014.  

As mentioned above the number of properties did go down slightly (only by one half of one percent).  So even though the number of properties listed for sale went down, it was not enough of a drop to have a significant impact on the market.  It's safe to say that the supply of homes on the market stayed pretty much stable in the 3rd quarter of 2014.  

While the supply of residential properties on the market stayed the same, it seems that the demand for residential properties in Tallahassee went up in the 3rd quarter of 2014 compared to the same time a year before. Year over year,  the number of properties sold went up by a little bit over 3% in the 3rd quarter of 2014.  

If the laws of economics hold true then with the supply of residential properties holding steady and the demand for residential properties going up, prices must have gone up...which they did.  In the 3rd quarter of 2014, the average sale price of residential properties in Tallahassee ticked up by about 3.4%. This is good news especially after experiencing a year over year price drop in the 2nd quarter of 2014.  

The average number of days it took to sell a residential property in the 3rd quarter of 2014 remained unchanged from the same time a year before at 98 days. At the same time, the average sale price/listing price ratio went up.  The average sale price/listing price ratio is what the average property sold for compared to what it's listed for sale at.  In the 3rd quarter of 2014 the average property sold for 96.98% of what it was listed for which is just slightly higher than 96.55% which is what it was in the 3rd quarter of 2013.  

The last metric I analyzed was the proportion of distressed sales (short sales and foreclosures) compared to total sales. In other words, out of all of the sales of residential properties what percentage of those are distressed sales. In the 3rd quarter of 2014, distressed sales made up 15.1% of total sales which is up slightly from 13.9% in the 3rd quarter of 2013.  

In looking at all of the metrics, it's interesting that distressed sales went up.  The reason I say that is because usually when distressed sales go up the average sale price will go down.  The reason for this is that distressed sales sell at a discount compared to regular sales and typically bring down the values of surrounding properties.  It is good news that prices went up even though the proportion of distressed sales went up.  This means that the demand for properties in Tallahassee was strong enough so that the increase in distressed sales did not bring down values.  

Tallahassee's real estate market seems to be stabilizing, and values are increasing at a rate that is on par with what values have historically increased by which is between 3%-5% a year.  It seems that the supply and demand of homes has pretty well leveled out, and the fluctuations that we are seeing from quarter to quarter seem to be normal fluctuations caused by normal market forces such as interest rates and the job market.  I think as long as the economy as a whole remains stable, then so will Tallahassee's real estate market.  

I think the main thing that could have an impact on our real estate market more than any other single item is what happens with interest rates.  The Federal Reserve has said that we can expect them to increase interest rates by Summer of 2015.  If the economy improves quicker than expected then they might increase the interest rates sooner than that even.  If interest rates go up, this will decrease most people's buying power since most people obtain mortgages to purchase real estate.  This decrease in buying power could have a negative impact on home values.  How large of an impact this will have depends on how much interest goes up, and also depends on what happens with the job market.  If the job market continues to improve and demand for homes continues to go up, then the increase in interest rates might not have as much of an affect on the real estate market.  Time will tell. 

See below to see a snap shot of the quarterly statistics I looked at for Tallahassee's real estate market.  

• The number of properties listed for sale decreased by 0.5% (1,344 properties were listed for sale) 

• The number of properties that sold increased by 3.1% (927 properties sold)

• The average sale price went up by 3.4% (average sale price was $191,764) 

• The average number of days it took to sell a property on average remained unchanged at 98 days.  

• The average sale price/listing price ratio increased by 0.43% up to 96.98%. 

• Distressed sales made up 15.1% of total sales which is up from 13.9% the year before. 

2nd Quarter 2014 Tallahassee Real Estate Market Statistics

2nd quarter 2014 Tallahassee Residential Real Estate Market Snapshot And Year Over Year Market Statistics.

In the second quarter of 2014 Tallahassee's real estate market displayed somewhat of a mixed bag in terms of having some both positive and negative metrics.  On the positive note, activity was up in the 2nd quarter of this year compared to the same time period a year earlier.  Both the number of properties that sold and the number of properties that are listed for sale went up.  We also saw an increase in average sale price/listing price ratio which shows how much a property sells for compared to what it's listed for sale at.  In addition to that, we also saw a decrease in the amount of time on average that it took a home to sell in the second quarter of 2014 compared to the same time frame a year earlier.  

On the negative side, we actually saw a decrease in the average price a home sold for.  What!!!???  I know, I know...you see everywhere in the news that prices are going up, up, up.  Well that might be true in some or most places, but it's just a good reminder that real estate is very local in nature, because in Tallahassee in the 2nd quarter of this year, the average sale price of residential property in Tallahassee fell by 6.7% compared to the same time a year earlier. 

In addition to the decrease in the average sale price, distressed sales (foreclosures and short sales) accounted for a larger percentage of total sales compared to the same time period a year earlier. Distressed sales typically sell at a discount compared to non distressed sales, and they typically bring down the value of surrounding properties.  The year over year increase in the distressed sales in Tallahassee in the 2nd quarter of 2014 is probably one of the main reasons prices also went down.  

As mentioned above, the number of properties listed for sale and the number of properties sold went up. The number of properties listed for sale increased by 16.5%, and the number of properties sold increased by 2.1%   In 2013 we saw big increases in prices of homes in Tallahassee.  This increase in home values in 2013 has inspired many home owners to go ahead and list their properties for sale because they can now sell their properties for a price that is acceptable to them.  I think that is the main reason the number  of properties listed for sale has gone up so much.  

This is good news for home buyers.  Over the last few years home buyers have complained about the lack of housing inventory, so it seems that the increase in housing inventory is much needed.  Buyers seem to have more homes to choose from now, which is a good thing.  

The increase in sales was pretty modest at 2.1%, but nevertheless it is an increase which is good.  This suggests that demand for housing is still good.  The slowly improving economy and continued low interest rates on home mortgages most likely plays a very big part in the continued increase in home sales.  I think what happens with interest rates in the next year will determine whether or not home sales continue to increase or not.  If interest rates start to tick up like they are predicted to in 2015, then it could possibly hamper home sales.  Job growth will also play a part in whether or not home sales will continue to get better.  

The average time it took to sell a property decreased by 13% going down from 99 days in the 2nd quarter of 2013 to 86 days in the second quarter of 2014.  Also, the average home sold for 96.77% of the asking price compared to 96.37% in the 2nd quarter of 2013. I think both of these statistics reflect that fact that people are listing their homes for less money on average then they did a year ago.  The reduced listing and sales prices have caused homes to sell quicker and closer to what they are listed for sale at.  

As mentioned above, the average home price decreased by 6.7% in the second quarter of 2014 compared to the same time a year earlier.  This is a fairly significant drop.  I think the reason for the decrease in prices are two fold.  First off, there has been an increase in distressed sales in the last year.  In the second quarter of 2014 distressed sales made up 20.9% of total sales compared to 17.9% in the second quarter of 2013.  Distressed sales reduce overall home values because they sell at a discount and they bring down values of surrounding homes.  

The second reason that I think average home values have gone down is that we had a large increase in the amount of properties listed for sale.  We had a 16.5% year over year increase in the number of properties listed for sale in the 2nd quarter of 2014.  I think that the increase in supply outpaced the increase in demand, and as a result prices went down.  

I think that the residential real estate market in Tallahassee is still trending in a positive direction. Once we work through the inventory of distressed properties (foreclosures and short sales) prices will consistently trend upward at a moderate pace that is on par with historical averages (somewhere between 2%-5% a year). Part of the decrease in prices are due to the distressed sales, but a part of it is also a symptom of normal fluctuations in supply and demand.  

I think the items to look out for that will influence the direction of the real estate market in the near future are interest rates and job growth.  When interest rates go up, you can expect to see a slight drop initially in home sales and prices....especially if job growth is not strong.  If job growth lags, you could also see the real estate market lag as well and vice versa.  

Home prices are still affordable, interest rates are low, and the overall cost of owning a home is very affordable...especially compared to renting.  Prices have come up some though over the last few years, so for sellers it's a lot better than it has been.  With this being said I think our market is in more of an equilibrium than it has been in for a while.  The only thing about our real estate market that is not normal historically is the high proportion of distressed sales.  

The summary of the  year over year real estate metrics for the 2nd quarter of 2014 I analyze are below. 

•  We saw a 16.5% increase in the number of properties listed for sale. (1,714 homes listed)

• We saw a 2.1% increase in the number of homes sold (1,006 homes sold)

• We saw a 6.7% decrease in the average sale price of a home.   The  average sale price was $177,333 compared to $183,902 in the 2nd quarter of 2013.  

 

•  We saw a 0.4% increase in the average sale price/list price ratio which measures what a property sells for compared to what it is listed for.  The average sale price/list price ratio in the 2nd quarter of 2014 was 96.77%

• We saw a 13% decrease in the average number of days it took to sell a property ( 86 days)

• We saw a 3% decrease in the number of distressed sales compared to total sales (20.9% of all sales were distressed sales).  

1st quarter 2014 Tallahassee Residential Real Estate Market Snapshot And Year Over Year Market Statistics

Tallahassee's residential real estate market was pretty stable in the 1st quarter of 2014.  Overall the market here improved in 1st quarter of 2014 from the first 1st quarter of 2013.  The number of residential property sales has increased, the number of properties listed for sale has increased, the average number of days a home sat on the market before it sold decreased and the percentage of distressed sales (foreclosures and short sales) compared to total sales has come down since the first quarter of 2013. 

For the first time in a while though, we did see a very slight decrease in average sale price in the 1st quarter of 2014 compared to the same time period a year before.  We also saw a very slight decrease in the average sale price/listing price ratio which compares how much the average home sells for compared to what it's listed for sale at.  These decreases were so small though (less than 1%) it's probably fair to say that prices and the sale price/listing price ratio was flat in the 1st quarter of 2014 instead of decreasing.  Nevertheless though, it is the first time in quite a while that we have not had a quarter with a year over year increase in prices. 

As mentioned above we saw an increase in the number of properties sold in the first quarter of 2014 compared to the same time the year before.  Sales of residential properties increased by 12.21% which I would say is a substantial gain.  The selling season jumped off to an early start this year compared to years past.  Being on the front lines here, I noticed this from my own business.  I think that people jumped into the market a little earlier this year because there was a sense of urgency to buy due to fear that interest rates would be going up.  This along with an overall improvement in the economy and job market is probably why year over year sales were up in the first quarter of this year. 

The number of properties listed for sale also increased year over year in the 1st quarter of 2014.  Listings increased by 4%.   The increase in listings I believe is due to the price increases we saw in 2013.  Due to prices increasing last year, more homeowners feel like it's a good time to list their homes for sale, because they can now get the price they want for their home. 

Average home prices decreased in the 1st quarter of 2014 down 0.59% from the 1st quarter of 2013.  Even though the price decrease was very small and is best described as saying prices are flat, it's still a change from the trend of increasing prices we have been seeing over the past few years.  However, to me it's not all that surprising.  For the past couple years, we have seen pretty substantial increases in prices.  In the first part of 2013 we saw year over year price increases of close to 10%.  That rate of increase was not sustainable.  Interest rates have increased somewhat this year compared to last year, so the higher interest rates could have something to do with prices not going up.  The average rate on a 30 year fixed rate mortgage in the 1st quarter of 2013 was 3.5%, and in the 1st quarter of 2014 it was 4.35%.  Higher interest rates decrease the buying power of people purchasing homes with a mortgage, so it would make sense that people are wanting to pay a little less for homes due to increased interest rates.  Besides this, I think the very slight decrease that we saw in home prices is a result of home prices just leveling out due to the balancing of supply and demand of homes

The average sale price/listing price ratio of homes also very slightly decreased in the 1st quarter of 2014 from the 1st quarter of 2013.  In the first quarter of 2014 the average home sold for 96.10% of what the home was listed for sale at down from 96.44% in the 1st quarter of 2013.  96.10% is still a very healthy average sale price/list price ratio, and is indicative of a good balance in the supply and demand of homes.  The 0.34% decrease we saw this year is probably a result of the market just balancing out and interest rates going up.  Nothing to be worried about though.

 

The average number of days a home sat on the market before it sold decreased in 1st quarter of 2014 by 14% coming down to 104 days compared to 121 days in 1st quarter of 2013.  When homes sell quicker this is healthy indicator for our real estate market.  It means that demand for homes is increasing and that sellers are pricing their homes right instead of overpricing their homes which causes homes to linger on the market without selling. 

 

Finally, the percentage of total properties sold that were distressed sales (foreclosures and short sales)  decreased in the 1st quarter of 2014 compared to a year earlier.  In the 1st quarter of 2014 distressed sales made up 19.81% of total sales in Leon County.  This is down from 23.1% in the 1st quarter of 2013.  Distressed sales sell at a discount compared to non distressed sales, and they bring down the property values of surrounding properties.  A decrease in the number of distressed sales is a positive sign that our real estate market is improving, and it's needed so that property values can increase in value over time.  As the distressed sale inventory continues to be sold off, we can expect distressed sales to continue to decrease.  Most distressed sales were a result of bad loans made during the housing bubble.  Most home loans made after 2009 have been good loans with low default rates, so the rate at which distressed sales are being sold is much greater than the rate of new distressed sales entering the pipeline. 

 

Overall the market improved in the 1st quarter of 2014 compared 1st quarter of 2013.  I think we can expect the market to continue to be stable in 2014.  With interest rates being higher this year, I think it's possible that prices could go down a little bit.  Since we had solid price increases over the last few years, I don't think it's anything to be worried about.  It's simply the market adjusting to increases in interest rates coming up from the historic lows we saw last year.  The fundamentals of our local real estate market are strong with sales and listings going up and distressed sales going down.  The important thing to realize is that if you are a buyer, it's still a great time to buy.  Interest rates are historically low, and prices are still very affordable. It's certainly more affordable than renting!  If you are a seller it's probably the best time to sell that we have seen since 2006.    A summary of the year over year market statistics for residential real estate for 1st quarter of 2014 in Leon County are below. 

 

The number of residential properties sold increased by 12.21% (651 properties sold)

 

• The number of properties listed for sale increased by 4% (1,395 properties listed for sale)

 

• The average sale price decreased by 0.59% ( average sale price of $171,419)

 

• Decrease in the average sale price/listing price ratio of 0.34% (average property sold for 96.1% of it's listing price)

 

• Decrease in the average days on the market of 14% (average days on market before sold was 104 days)

 

• Decrease of 3.3% in the overall percentage of distressed sales compared to total sales (distressed sales made up 19.81% of total sales).

 

• Average rate on a 30 year fixed rate mortgage increased from 3.5% in 1st quarter of 2013 to 4.35% in first quarter of 2014.   

 

4th Quarter 2013 Tallahassee, FL. residential real estate snapshot and year over year market statistics.

4th Quarter 2013 Tallahassee Residential Real Estate Market Snapshot And Year Over Year Market Statistics.

  

  

     Tallahassee's residential real estate market continued to rally in a positive direction in the 4th quarter of 2013. Year over year, every single metric that I used to analyze the condition of our local residential real estate market improved in the 4th quarter of 2013 from the same time period a year earlier.  

 

The big improvement though came in the number of properties listed for sale.  Year over year we saw a 22.4% increase in the number of properties listed for sale in the 4th quarter of 2013.  This is very good news because over the past year or two our local housing inventory has been tight. This has made it difficult for home buyers to find the right house.  It has also led to many situations where there have been multiple bids on properties leaving many home buyers frustrated when they are not the winning bidder.  

 

The increase in the number of properties listed for sale is probably caused by a combination of factors.  The overall improvement in the job market and economy has given life to move up buyers who are selling their smaller homes to purchase larger homes.  Also, home prices have started to climb over the last year or so which has brought many homeowners out of negative equity and into positive equity allowing them to sell their homes without having to bring money to closing. This combination of events has caused an increase in the number of properties listed for sale. Hopefully this year, home buyers in Tallahassee will find shopping for a home a little easier since they will have more homes to choose from.  

 

The second area of improvement that we saw in the 4th quarter of 2013 was an increase in the average sale price.  The average year over year sale price of residential properties in Tallahassee increased by 1.7%.  While this increase is small, it is still an increase.  It's important to keep in mind that earlier in the year, we were seeing year over year increases of around 8% in property values.  That level of increase is not sustainable, and now it looks like our local real estate market is starting to balance out, and prices are starting to go up at a sustainable rate.  Historically, an average annual increase of 3%-5% is considered normal, so in the 4th quarter of 2013, prices rose just a little below that level. As the market heats up in the spring and summer though, annual price increases will probably jump up into that 3%-5% range.  

 

The third area of improvement that we saw in the 4th quarter of 2013 was in the number of residential properties sold.  In the 4th quarter of 2013 we saw a 5.6% year over year increase in the number of properties sold.  The increase in home sales along with an increase in average sale prices are the most important signals that our housing market is improving. The increase in sales is attributed to again the improving economy, as well as to a slight easing on mortgage lending standards.  Lenders have slightly relaxed their lending standards making it easier for buyers to get loans to purchase homes.  Finally, it seems that more people are buying homes because they have stopped worrying that properties will lose value and people once again have regained confidence that homes are good long term investments that will appreciate over time.  

 

The next metric where we saw improvement in is the average days on the market it took to sell a home.  Year over year the average time it took to sell a home in Tallahassee decreased by 30% going down from 141 days in the 4th quarter of 2012 to 98 days in the 4th quarter of 2013.  The decrease in the average amount of time it took to sell a property is a sign of stronger demand from home buyers which is a tell tale sign of an improving real estate market.  

 

We also saw an improvement in the average sale price to listing price ratio. This ratio simply measures what a home sells for compared what it is listed for sale at.  In the 4th quarter of 2013, the average house sold for 96.26% of it's list price.  This ratio is high and is also indicative of strong buyer demand for housing.  

 

Last but certainly not least, in the 4th quarter of 2013 we saw a decrease in the portion of homes sold that were distressed sales (short sales and foreclosure sales).  In the 4th quarter of 2013 distressed sales accounted for 16.2% of all single family residential property sales in Tallahassee.  This figure is down from 23.6% in the 4th quarter of 2012.  

 

Distressed sales typically sell at a discount compared to non-distressed sales, and they bring down values of surrounding properties.  For a while now, distressed sales have been suppressing home values. Now that they are decreasing in both total number as well as decreasing as a portion of total sales, property values will have an easier time continuing to increase as they have done historically.  

Overall Tallahassee's real estate market is on strong footing, and we are transitioning back into a healthy and balanced real estate market.   The average annual price increases are back to historical and sustainable levels.  Also, the level of housing inventory and buyer demand for housing is balancing out.

As we move into the new year I think we can expect to see home prices increase slightly in Tallahassee as well as slight increases in both number of homes sold and the number of homes listed for sale.  

There could be a couple of things that could hinder our local real estate market going forward.  First off, it seems that banks are starting to unload more foreclosure properties on to the market. If we have a sharp increase in the number of foreclosure properties on the market, this could hurt home prices. Also, the new qualified mortgage lending standards went into effect on January 10th 2013 which could make it tougher on some looking to obtain mortgages to purchase homes.  This could hurt home sales.  Most likely though the increase in buyer demand for homes and the improvement in the overall economy and job market will be enough to overcome these obstacles, and our real estate market will continue to improve modestly and move in a positive direction in 2014.  The Tallahassee year over year 4th quarter real estate market metrics are below for you to review.  

• 22.4% increase in number of properties listed for sale (996 properties)

• 5.6% increase in the number of properties sold (703 Properties)

• 1.7% increase in the average sale price ($181,356)

• 1.32% increase in the average sale price/listing price ratio (96.26%)

•  30% decrease in the average number of days it took to sell a property (98 days)

• 7.4% decrease in the proportion of distressed sales compared to total sales (distressed sales made up 16.2% of total sales).  

3rd Quarter 2013 Tallahassee Residential Real Estate Market Snapshot And Year Over Year Market Statistics.

  

  

Well Tallahassee's real estate market continues to improve in the 3rd quarter of 2013 when compared to the same time a year earlier.  We saw overall improvements in all of the metrics from the 3rd quarter of 2012 to the 3rd quarter of 2013.  Based on the improvements it seems that Tallahassee's local real estate market is recovering from the real estate bust, and is returning to more of a historically traditional and balanced real estate market.

 

First of all, the number of residential properties listed for sale in Tallahassee increased by 26.2% year over year in the 3rd quarter of 2013.  This is great news because in the last year and a half or so we have had a shortage of housing inventory making it hard for homebuyers to find a home that fits their needs.  The shortage of housing inventory has led to many bidding situations on properties, so this recent increase housing inventory is good news for homebuyers as it will provide them more homes to choose from.

 

In addition to the increase in the number of properties listed for sale, we also saw a whopping 29.3% year over year increase in the number of properties sold in Tallahassee in the 3rd quarter of this year.  The increase in home sales has largely been a product of an improving economy in the state of Florida, affordable home prices and low interest rates on home loans.  Also lenders have very slowly been relaxing a little bit on lending standards making it a little bit easier for buyers to obtain home loans.  I emphasize a little bit because lending standards are still more strict compared to historical norms.  The overall increase in home sales is a sign of an improving local real estate market though.

 

The year over year average sales price of residential property also went up in Tallahassee in the 3rd quarter of this year.  The increase in the average sales price was only a modest 3.03%, but that falls in line with the rate that homes have historically appreciated by.  This rate of increase seems to be a sustainable rate of increase, so this is one sign that we are back to more historically traditional real estate market conditions.  This should spur more buying and selling of property as more people regain the confidence that real estate is again a safe investment. 

 

Another sign that the real estate market is improving here in Tallahassee is that the sale price/list price ratio for residential real estate increased in the 3rd quarter of 2013.  This ratio measures what the average home sells for compared to what it's listed for sale at.  In the 3rd quarter of 2013 the average home sold for 96.61% of what it was listed for sale at.  That is up from 96.01% in the 3rd quarter of 2012.  The increase in the average sale price/list price ratio indicates that there is healthy buyer demand for residential properties, and that people selling residential properties are listing their property for sale at close to what it's market value is. 

 

The fifth metric I look at is the average number of days a property sits on the market before it sells.  This also improved in the 3rd quarter of 2013 from the same time a year ago.  The average time a residential property sat on the market before it sold decreased by 22.2% from the same time a year earlier.  This means that homes are not lingering on the market as long which is an indication that sellers are pricing their homes to sell and that there is an increase in buyer demand for homes both of which are positive things for Tallahassee's real estate market. 

 

Last but not least, the total number of distressed sales (foreclosures and short sales) compared to the total number of home sales in the 3rd quarter of 2013 decreased by 9.1% from the same time a year ago.  Distressed sales only made up 13.9% of total sales in Tallahassee in the 3rd quarter of this year which is much better than 23% last year at this time.  This is great news!  Distressed sales typically sell at a discount compared to normal sales. These discounted sales prices typically depress overall home prices by bringing down the values of surrounding properties.  The large number of distressed sales over the last few years has continued to keep home prices down, so the fact that distressed sales are now making up a smaller portion of total sales leads the way to increasing property values. 

 

Overall Tallahassee's real estate market is continuing to improve.  It will most likely continue to improve, and prices will most likely increase modestly in the foreseeable future.  A couple things that could hinder the recovery would be if we have a sharp increase in interest rates or if the number of short sales and foreclosures begins to increase again.  Interest rates will most likely go up, but probably modestly, and foreclosures and short sales will probably to increase slightly in Tallahassee as banks begin to unload property again.  However the improved economy and increase in buyer demand will most likely be enough carry our real estate market in a positive direction in the near future.

 

The summary of the 3rd quarter real estate metrics is below.

 

• 26.2% increase in the number of properties listed for sale. (1,297)

• 29.3% increase in the number of properties sold. (887)

• 3.03% increase in the average sale price ($185,035 average sale price)

• 0.6% increase in the average sale price/list price ratio (96.61%)

• 22.2% decrease in the average number of days on the market. (98 days)

• 9.1% decrease in the portion of distressed sales compared to total sales.  (13.9% of all sales were distressed sales)

1st Quarter Tallahassee Real Estate Market Statistics

1st Quarter 2013 Tallahassee 

Residential Real Estate  Market Snapshot.

It appears that the overall health of the local residential real estate market in Tallahassee has continued to move in a healthy direction through the first quarter of 2013.  Sales are up year over year in quarter one of 2013 from quarter one of 2012.  Also, the total number of properties listed for sale has also increased.  The increase in the number of properties listed for sale is most likely a result of increased confidence in the real estate market stemming from a sharp year over year increase in the average price of a home in Tallahassee in 2012. The recent increase in property values in Tallahassee has also probably lifted some homeowners who previously wanted to sell but could not from being underwater on their mortgages thus enabling them to now have the ability to sell their homes.  

Other positive signs that Tallahassee's residential real estate market is heading in the right direction is that the average sale price/list price ratio increased.  Also, the average number of days a property took to sell decreased.  Finally, both the ratio of distressed sales compared to total sales decreased as well as the total number of distressed sales decreased in the 1st quarter of 2013 from the same time period a year before.  

The average sale price/list price ratio is the percentage of what a property sells for compared to what it is listed for sale at. The higher this ratio is, the healthier the real estate market typically is.  

The decrease in the ratio of distressed sales compared to total sales indicates that the real estate market is getting better since distressed sales typically sell at a discount thus depressing the values of surrounding properties and the overall market.

The only negative aspect of this data, which might not even be that negative, is that the average sales price was down a tiny bit in the first quarter of 2013 compared to the first quarter of 2012.  This might not be a result of negative market conditions, but instead a result of the increase in the supply of homes on the market.  The increased supply seems to have caused prices to keep from increasing.  However, there will likely be an increase in demand for housing too with the job market improving which will most likely cause the newly increased supply of homes to be absorbed.  Most likely, home prices in Tallahassee will continue to hold steady and increase very modestly into the near future.  

A snap shot of the year over year market statistics for the 1st quarter of 2013 are below.  If you have any questions about any of these market statistics, please don't hesitate to contact me! Remember, an informed consumer will always have the edge over the uninformed consumer!

• 8.7% increase in the number of properties listed for sale (1,254)

• 10% increase in the number of overall properties sold (570)

• 1.2% decrease in the average sales price ( $170,681)

• 2.05% increase in the overall sale price/listing price ratio (96.46%)

• Average days it took a property to sell decreased 30.9% (121 days)

• Foreclosures and short sales in 1st quarter of 2013 made up 23.5% of total sales which is down from 29.3% in the first quarter of 2012.