Tallahassee 4th Quarter Real Estate Market Report

4th Quarter 2016 Tallahassee Residential Real Estate Market Snapshot And Year Over Year Market Statistics. The real estate market in Leon County in the 4th quarter of 2016 was robust and saw strong gains across most metrics analyzed compared to the 4th quarter of 2015.  The number of properties sold was way up, the average sales price of a home was way up, the number of days on average it took to sell a home went down, homes sold closer to their asking prices compared to a year ago, and distressed sales (foreclosures and short sales) made up a smaller percentage of total overall sales.   The only problem we are still having in our local real estate market is that the number of homes being listed for sale has continued to decrease thus shrinking the amount of available housing inventory that buyers have to chose from. Let's look at and analyze each metric individually.    Let's start out with housing inventory levels and the number of homes listed for sale.  The 4th quarter of 2016 saw a 13.1% decrease in homes listed for sale compared to the 4th quarter of 2015.  With an improving economy, housing demand has continued to increase.  More people have jobs, and incomes have finally started to rise a little over the last year, and because of this we need more homes on the market to meet the growing demand for homes. However, we are seeing the opposite with fewer homes on the market compared to last year. Expensive land costs and expensive regulations have curtailed new construction of homes. Also, fewer people are listing existing homes as well for whatever reason. It's possible that since 2016 was an election year that many put selling their homes on hold.  If that is the case then we should hope to see an increased level of housing inventory in 2017 to meet the growing demand for homes. Time will tell.   Even though year to year listings were down in the 4th quarter of 2016, sales were up. We saw a 9.5% year over year increase in homes sales across Leon County in the 4th quarter of 2016.  An improving economy is most likely the reason more people are bought homes this past year.    With the numbers of properties available for sale going down and the number of properties sold going up, year over year prices went up big time in the 4th quarter of 2016. In the 4th quarter of 2016, Leon County saw a whopping 17% increase in the average sale price with the average sales price jumping from $175,193 in the 4th quarter of 2015 to $204,980 in the 4th quarter of 2016.    The sale price/listing price ratio increased by 0.53% in the 4th quarter of 2016 compared to the same time a year earlier. Homes actually sold for 97,33% of the homes listing price in the 4th quarter of 2016.  This high percentage is indicative of a it being a seller's market.   The average number of days that it took for a home to sell in the 4th quarter of 2016 went down by 2.3% compared to the same time period a year ago.  In the 4th quarter of 2016 homes sold in 84 days on average.   Finally, distressed sales (foreclosures and short sales) made up a smaller percentage of total sales in the 4th quarter of 2016 compared to the same time a year ago.  Distressed sales only made up 7.9% of all sales in Leon County in the 4th quarter of 2016 compared to 13.8% in the 4th quarter of 2015.   In a normal market, distressed sales have historically made up about 5% or less of total sales, so we are getting close to distressed sales getting back to their historically normal levels.  Overall the real estate market here in Leon County seems to be booming in terms of increased level of demand. Increasing number of sales, home prices, and a sale price/listing price ratio combined with decreased number of days on the market all point to strong gains in demand for homes.  We are still struggling on the supply side though with far fewer homes available to meet the growing demand. This means that in Leon County in 2017 it will be a real estate market best suited for selling a home, and it will be a tough market for people looking to buy a home. Don't mistake this for a boom similar to 2005-2007 though. Homeowners still need to price their homes according to what recent sales suggest their homes are worth and also sellers need to get their homes in tip top shape in order to get top dollar.  Home buyers these days have become very picky...probably due to HGTV.   Increasing interest rates and home prices could curb demand for homes somewhat in 2017, but due to a continuously improving economy and a more business friendly White House, we will probably see housing demand continue to go up.   The question is will more homeowners begin to list their homes for sale. I think more homeowners will list their homes due to increasing prices which will help ease the housing shortage, but I don't think it will be enough to bring about an equilibrium in housing supply and housing demand. It will still be a sellers market in 2017.    Below are the real estate market statistics for Leon County as a whole as well as for each quadrant of Leon County.    Tallahassee as a whole   Listings decreased by 13.1% (978 properties listed for sale)  Sales increased by 9.5% (891 properties sold) Average sale price increased by 17%  (Average sale price was $204,980) Average Sale price/list price ratio increased by 0.53% (Average sale price/list price ratio was 97.33%) Average days on the market to sell decreased by 2.3% (Average home sold after 84 days on the market) Proportion of distressed sales to total sales decreased by 5.9% (distressed sales accounted for only 7.9% of all sales).    Northeast Tallahassee   Listings decreased by 15.2% (404 Properties listed for sale)  Sales increased by 12.9% ( 428 properties sold)  Average price increased by 16.7% ( Average sale price was $270,073) Sale price/list price ratio increased by 0.9% (Average sale price/list price ratio is 97.45%)  Average days on the market decreased by 9.6% (took a home 74 days on average to sell)  The proportion of distressed sales to total sales decreased by 4.4% ( distressed sales made up 5.9% of total number of sales)    Northwest Tallahassee   Listings decreased by 20% (282 properties listed for sale)  Sales increased by 2% (251 properties sold)  Average sale price increased by 7.4% (average sale price was $133,390)  Average sale price/list price ratio increased by 1.2% (average sale price/list price ratio was 96.6%) Average days on the market before a home sold increased by 4.7%. ( On average it took 89 days before a home sold)  The proportion of distressed sales compared to total sales decreased by 9.1% (distressed sales made up 8.4% of total sales)  Southeast Tallahassee   Listings decreased by 3.5% (167 properties listed for sale)  Sales increased by 16.7% (140 properties sold) Average prices increased by 17% (average purchase price $181,222) Average sale price/list price ratio increased by 0.85% ( average sale price/list price ratio was 97.75%)  Average days on the market before a home sold decreased by 10.2% (Average home sold after 88 days on the market)  The proportion of distressed sales compared to total sales decreased by 4.4% (6.4% of all sales were distressed sales)  Southwest Tallahassee Listings increased by 2.5% ( 81 properties listed for sale)  Sales increased by 15% (number of properties sold 69)  Average sales price increased by 68% (average purchase price was $101,616) Average sale price/listing price ratio increased by 2.6% (average sale price/list price ratio was 97.11%)  Average days on the market before a property sold increased by 28% (average home sold after being on the market for 119 days)  The proportion of distressed sales compared to total sales decreased by 2.1%. (distressed sales made up 24.6% of the total number of sales).  If you have any questions or comments, please contact Bobby Nahoom at (850) 567-0037 or at nahoom1171@yahoo.com   .

Tallahassee 3rd Quarter Real Estate Market Report

3rd Quarter 2016 Tallahassee Residential Real Estate Market Snapshot And Year Over Year Market Statistics. If I could sum up the Tallahassee Real Estate Market in a nutshell this 3rd quarter, I would say it gravitated to even more of a seller's market. Compared to the same time a year ago,  the main market trends we saw this 3rd quarter was fewer homes listed for sale, the number of homes sold stayed about the same, and home prices went up.  Distressed sales (foreclosures and short sales) continued to decrease as a percentage of total sales. Homes sold quicker in the 3rd quarter compared to the same time a year ago, and homes sold for an amount closer to the listing price than compared to the same time a year ago.  The steady demand from home buyers and the decreased inventory have made it a great market if you are selling your home, but for home buyers it has been quite a frustrating market. Well priced homes in decent locations  that show well have been flying off the market making it tough for buyers to find the right home.    First off let's talk about number of homes listed for sale.  As I stated above, there seems to be a housing inventory issue.  Compared to the same time last year, the number of properties listed for sale decreased by 9.3%.  This has caused a shortage of homes to meet the steady demand for homes.  Housing demand in the 3rd quarter of this year remained about the same compared to the same time a year ago. The number of properties sold in the 3rd quarter of this year only decreased by less than 1% compared to the same time last year.  This is certainly good, and it's an indication that the job market is getting better or at least holding steady.   With housing demand staying steady and the inventory of homes decreasing from last year, home prices were pushed up in the 3rd quarter of this year compared to the same time a year ago.  Year over year,  home prices were up 3.9% in the 3rd quarter of this year. This increase is a healthy and sustainable level of price appreciation that falls within the historical level of 3%-5% annual increase in home prices.  Homes also sold faster in the 3rd quarter of 2016 compared to the 3rd quarter of 2015.  Average days on the market in the 3rd quarter of this year decreased by 2.3% compared to last year with the average home selling after being on the market for 82 days.  The sale price/list price ratio, which shows how much a home sells for compared to what is was listed for sale at, went up in the 3rd quarter of 2016 compared to the same time a year prior. On average, homes in Leon County sold for 97.9% of the listing price in the 3rd quarter of 2016. Such a high sale price/listing price ratio is another strong indicator that we are in a seller's market.  Last but not least, we saw another year over year decrease of distressed sales ( short sales and foreclosures).  Distressed sales only made up 8.2% of total sales in the 3rd quarter of this year compared to 10% in the 3rd quarter of 2015. Distressed sales typically sell at a discount compared to non-distressed sales, and they typically bring down the values of surrounding properties.  Distressed sales in a normal housing market make up around 5% of total sales, so we still have a little bit of room to go before distressed sales are back to normal levels, but with distressed sales only accounting for 8.2% of total home sales, we are much closer to the historically normal level of 5% then compared to the 25%-30% level we were at during the depth of the recession.  Overall the real estate market is doing well in Tallahassee.  It seems the job market is getting better or at least holding steady which is causing a healthy demand for housing. There is no problem with housing demand, but with the supply of housing. The main problem with our real estate market right now is that we have such a shortage of inventory to meet the growing demand in an improving economy.  The reason for the shortage of homes I think is a problem within itself  that won't be an easy fix.   High land costs in Tallahassee and expensive building regulations in Leon County (and around the state and country for that matter) have made new construction very expensive. Most new construction is geared towards bigger homes where builders can make more of a profit.  Builders can't build starter homes and make money, so this has caused an inventory shortage among starter homes. New construction levels are far below normal historical levels, and this is causing an inventory shortage.  I believe this will be a tough fix, and  there will be inventory shortage for quite some time.  This will create opportunities for some though, including people looking to buy older homes in need of work to fix and flip them for a profit to end users.  More home buyers may also need to take advantage of renovation loans where one can tie in the costs of needed repairs to his/her loan. This is a good option for first time buyers who don't have a lot of cash to make needed repairs, and could provide a way for a young first time home buyer to get into a house for a good price in this inventory constrained market.   In the near future I would expect to see the market stay fairly stable.  The fact that this is an election year may be partly to blame for the inventory shortage as many homeowners may be nervous about the outcome of the election and may be postponing the sale of their home until after the election.  We won't know if this is the case until after the election though. Either way,   I think the inventory shortage will be a problem for at least the next couple years until new construction prices go down.  A summary of the 3rd quarter year over year residential real estate market statistics for Leon County is below. Tallahassee as a whole   Listings decreased by 9.3% (1,379 properties listed for sale)  Sales decreased by less than 1% (1,116 properties sold)  Average sale price increased by 3.9% (Average sale price was $196,849) Average Sale price/list price ratio increased by 1% (Average sale price/list price ratio was 97.9%) Average days on the market to sell decreased by 2.3% (Average home sold after 82 days on the market)  Proportion of distressed sales to total sales decreased by 1.8% (distressed sales accounted for only 8,2% of all sales).    Northeast Tallahassee   Listings decreased by 2.2% (707 properties listed for sale)  Sales decreased by 3.6% ( 562 properties sold)  Average price increased by 3.1% ( Average sale price was $258,553) Sale price/list price ratio increased by 1.11% (Average sale price/list price ratio is 98%)  Average days on the market decreased by 2.7% (took a home 73 days on average to sell)  The proportion of distressed sales to total sales decreased by 1.5% ( distressed sales made up 5.2% of total number of sales)    Northwest Tallahassee Listings decreased by 15.3% (382 properties listed for sale)  Sales increased by 7.2% (327 properties sold)  Average sale price increased by 2.1% (average sale price was $121,029)  Average sale price/list price ratio increased by 0.57% (average sale price/list price ratio was 97.41%) Average days on the market before a home sold increased by 8%. ( On average it took 94 days before a home sold)  The proportion of distressed sales compared to total sales decreased by 1.7% (distressed sales made up 9.8% of total sales)  Southeast Tallahassee   Listings decreased by 14.8% (202 properties listed for sale)  Sales increased by 5.1% (165 properties sold) Average prices increased by 18.2% (average purchase price $181,162) Average sale price/list price ratio increased by 1.05% ( average sale price/list price ratio was 98.39%)  Average days on the market before a home sold increased by 1.3% (Average home sold after 77 days on the market)  The proportion of distressed sales compared to total sales decreased by 0.1% (13.3% of all sales were distressed sales)  Southwest Tallahassee Listings decreased by 20% ( 88 properties listed for sale)  Sales decreased by 16.2% (number of properties sold 62)  Average sales price increased by 9.2% (average purchase price was $79,170) Average sale price/listing price ratio decreased by 0.33% (average sale price/list price ratio was 96.10%)  Average days on the market before a property sold decreased by 28.8% (average home sold after being on the market for 116 days)  The proportion of distressed sales compared to total sales decreased by 8.7%. (distressed sales made up 12.9% of the total number of sales).

If you have any questions or comments, please contact Bobby Nahoom at (850) 567-0037 or atnahoom1171@yahoo.com

1st quarter 2016 Tallahassee Residential Real Estate Market Snapshot

1st Quarter 2016 Tallahassee Residential Real Estate Market Snapshot And Year Over Year Market Statistics.

The residential real estate market here in Tallahassee started off the year in the 1st quarter of 2016 with robust activity. We saw gains in both the number of properties listed for sale and in the number of properties sold.  The year over year increase in the number of properties sold was substantially higher than the number of new properties listed for sale though. This shows that the demand for homes is outpacing the new supply of homes becoming available for sale. With demand exceeding supply you would think that prices would be going up, but strangely enough the year over year prices decreased in Leon County in the 1st quarter of 2016.  This is actually the second quarter in a row that we have seen decreasing year over year home prices in Leon County which seems to suggest that our market is experiencing a price correction resulting in the huge price increases we saw in early 2015 when year over year prices increased by nearly 20%. 

In the first quarter of this year we also saw a year over year decrease in the average time it took to sell a home.  Homes also sold for a little bit closer to their listing prices in the 1st quarter of 2016 compared to the 1st quarter of 2015.  Finally, distressed sales made of a much smaller percentage of total sales in the 1st quarter of 2016 compared to the same time period a year earlier. 

Lets start off by talking about the year over year increase in properties listed for sale and increase in properties sold.  We saw a good sized year over year increase in the number of properties listed for sale in the 1st quarter of this year.  To be exact, the number of properties listed for sale in the 1st quarter of this year increased by 5.7% compared to the same time a year prior.  This is a good indication that homeowners are feeling more confident that now is a good time to sell their properties.  

While the number of properties listed for sale increased, the number of properties that actually sold in the first quarter of 2016 saw even bigger increases compared to the 1st quarter of 2015.  Year over year sales in the 1st quarter of 2016 increased by a whopping 14%.   What this means is that the increase in  demand for homes is outpacing the new supply of homes available for sale.  This increase in the sales of properties over the number of new properties being listed for sale has created a very competitive marketplace for home buyers this Spring.  Home buyers don't have a large inventory of homes to choose from, and often times homes that come up for sale that are priced right end up flying off the market before most interested home buyers even have a chance to place an offer on the property. With the increase in the demand for homes outpacing the new supply of homes, you would think that home prices would be rising, but that is not the case. 

Year over year home prices in the 1st quarter of 2016 actually decreased by 4% compared to the 1st quarter of 2015.   On the surface it might seem a little bit strange for home prices to go down when demand for homes is far out pacing the supply of homes. However, when we look at the situation more closely I think the reason why home prices have gone down is fairly simple. 

In the 1st half of 2015 we saw double digit year over year price increases that reached nearly 20%.  That is a huge increase in home prices in a very short period of time. That level of price appreciation is not sustainable, and I think our local real estate market is going through a price correction right now in response to the sharp price increases from a year ago. 

When we look at the situation even more closely, I think there is another reason that we are seeing prices decrease.  Over the past several years now, home prices have been on the rise. While home prices have been rising, people's incomes have not been rising. People's incomes over the past few years have been stagnant for the most part with only extremely small increases in some years.  Overall though, home prices have been exceeding incomes by leaps and bounds.   I think we are at the point now where people's incomes are limiting how much people can pay for homes, and until people's incomes start to go up then home prices will overall stay flat and not increase.  So to sum it up, I think that year over year prices went down in the 1st quarter because of a market price correction and because people's incomes are not going up. 

The average number of days that it took to sell a home in the 1st quarter of 2016 decreased by 6.7% going from 104 in the 1st quarter of 2015 to 97 days in the 1st quarter of this year.  The average sale price/listing price ratio, which measures how closely a home ends up selling for compared to what it's listing price is, slightly increased going up to 97.19% from 97.09% in the 1st quarter of 2015. So this means that the average home in Leon County in the 1st quarter of 2016 sold for 97.19% of what it was listed for sale at.  This indicates that we are in a strong sellers market here in Leon County. 

Finally, we continued to see distressed sales (foreclosures and short sales) making up a smaller percentage of total sales in the 1st quarter of 2016.  In the 1st quarter of 2016 distressed sales made up only 10.9% of all residential property sales. This is a big drop down from 17.9% in the first quarter of 2015.  Distressed sales typically sell at a discount bringing down the values of surrounding properties. Everything else being equal,  the fewer distressed sales we have, the higher home values should be.  

Overall I think that the residential real estate market is Leon County is doing very good. The market is hot, and both listing and selling activity picked up a good bit in the first quarter of 2016 compared to the 1st quarter of 2015. Prices saw a small decrease in the 1st quarter of this year compared to the same time a year earlier, but I don't think this is a bad thing.  Prices have been increasing so much over the last few years while incomes have not. If the home prices keep going up at a pace that exceeds income levels then we will eventually have a housing affordability crisis on our hands. I think the small price decreases are a good thing, and will serve to help  keep housing affordable for home buyers.   

Distressed sales have continued to go down and have reached a level of about 10% of total sales.  This is still above the historical level of about 5% though, so hopefully we'll see distressed sales continue to decrease down towards that 5% mark as the banks continue to sell off their inventory of distressed properties. Of course the lower level of distressed sales will be good for property values, but it also means fewer opportunities for investors to pick up investment properties at steep discounts. 

Looking ahead, what are some things we need to pay attention to that could drive the direction of our real estate market? Locally, I would say to look out at how new developments across Tallahassee could have an impact on property values and rents in certain areas. The new VA hospital on the corner of Blairstone and Orange Avenue is close to being finished, and will most likely bring new demand for both rental properties as well as new home buyer demand to that area. There will be people coming into town for new jobs there, and also there will most likely be veterans that move to Tallahassee to live close to the new VA hospital. Purchasing real estate in this area right now might be a smart move. 

Another development is the opening of the new Centre of Tallahassee on the corner of John Knox Road and North Monroe Street.  This place will bring new jobs to the area and people will want to live close to this development. It will include a big concert venue, shopping, dining and movie theaters. Purchasing real estate close by to this development might not be a bad idea either as demand for housing nearby is likely to go up. 

Broadly speaking I think I would keep my eye on interest rates and people's wages. If interest rates go up then it could have a negative affect on home sales. The Federal Reserve is likely to increase the Federal Funds Rate again which could cause interest rates to rise.  It could also cause stock prices to drop which could in turn make people more hesitant to purchase homes. With wages, I would pay attention to see if wages start to creep up substantially.  If they don't then I would expect  home prices to remain flat  for the foreseeable future.  

A summary of the 1st quarter year over year residential real estate market statistics for Leon County is below.

 

Tallahassee as a whole

 

• Listings increased by 5.7% (1,532 properties listed) 

• Sales increased by 14% (871 properties sold) 

• Average sale price decreased by 4%(Average sale price was $179,431)

• Average Sale price/list price ratio increased by 0.1% (average sale price to list price ratio was 97.19%)

• Average days on the market to sell decreased by 6.7%. (Average days on the market was 97 days) 

• Proportion of distressed sales to total sales decreased by 7% (distressed sales made up 10.9% of total sales) 

 

Northeast Tallahassee

 

• Listings decreased by 1% (759 properties listed for sale)

• Sales increased by 3% ( 390 properties sold) 

• Average price decreased by 2.2% (Average sale price was $248,484)

• Sale price/list price ratio increased by 0.24% (sale price to listing price ratio was 97.62%) 

• Average days on the market decreased by 9% ( average days on the market was 90 days)

• The proportion of distressed sales to total sales decreased by 4.1%. (distressed sales made up 6.2% of all sales) 

 

Northwest Tallahassee

• Listings increased by 9.6%. (446 properties listed for sale)

• Sales increased by 16.2% (266 properties sold) 

• Average sale price decreased by 2.1%  (Average sale price was $112,699) 

• Average sale price/list price ratio decreased by 0.35% (average sale price/listing price ratio was 95.59%)

• Average days on the market before a home sold increased by 10.5% ( the average home sold in 105 days) 

• The proportion of distressed sales compared to total sales decreased by 7.2% (distressed sales made up 17.3% of all sales) 

Southeast Tallahassee

 

• Listings increased by 6.5% (212 total properties listed  for sale 

• Sales increased by 51.5% (147 properties sold) 

• Average prices decreased by 2.9% (average sales price was $165,560)

• Average sale price/list price ratio increased by 0.39% ( average sale price/listing price ratio was 98.08%) 

• Average days on the market before a home sold decreased by 16.1% (home sold on average after 94 days on the market)

• The proportion of distressed sales compared to total sales decreased by 10.4% (distressed sales made up 10.2% of all sales)

Southwest Tallahassee

• Listings increased by 49.4%  (115 properties listed for sale) 

• Sales increased by 13.3% (68 properties sold)
• Average sales price increased by 14.3% ($74,417) 

• Average sale price/listing price ratio increased by 0.78% (Average sale price/listing price ratio was 94.54%)  

• Average days on the market before a property sold decreased by 26.5% (It took 111 days on average for a home to sell)

• The proportion of distressed sales compared to total sales decreased by 20.3% (distressed sales made up 14.7% of total sales) 

Tallahassee 4th quarter real estate market update

Bobby's Real Estate Column

4th quarter 2015 Tallahassee Residential Real Estate Market Snapshot And Year Over Year Market Statistics. After seeing robust year over year gains in sales and home prices in the first half of 2015, the residential real estate market underwent somewhat of a cooling off period in the 4th quarter of 2015.  Both the number of homes sold and the number of properties listed for sale remained pretty much flat compared to the 4th quarter of 2014. Also,  in the 4th quarter of 2015 average home prices actually saw a sizable 6.1% drop compared to the same time period a year earlier.   This is the biggest year over year drop in home prices that we have seen in quite some time in Tallahassee, but I don't think this is something to be too concerned about. In a normal real estate market it's common to have some ebbs and flows in the market.   In the first half of 2015 we saw year over year increases in home values reaching nearly 20%. The decrease in home prices that we saw in the 4th quarter is most likely the market correcting itself after a very hot  selling season in the Spring and Summer of 2015.  If we see year over year values continue to fall into the first half of 2016, then we might have something to worry about, but as of right now I would not worry about prices falling much further.  Besides the drop in home prices, the rest of the real estate market data that I analyzed seemed to show signs that our real estate market is doing fine.  In the 4th quarter of 2015 the average time it took a sell a property was 86 days which was 15.7% quicker than what it took in the same period a year prior.  The average sale price/listing price ratio decreased by  0.16% year to year in the 4th quarter of 2015, but still was at a healthy level of 96.57%. This means that in the 4th quarter of 2015 the average home sold for 96.57% of it's listing price. That high of a sale price/listing price percentage shows that home buyer demand is very robust in our local real estate market.   Another indication that our local real estate market is doing well is that distressed sales (short sales and foreclosures) continued to fall, making up a smaller portion of all real estate sales. Distressed sales only made up 13.7%  of total sales in the 4th quarter of 2015.  This is down by 4.2% from the 4th quarter of 2014 when distressed sales made up 17.9% of total sales.  Distressed sales typically sell at a discount compared to non distressed real estate sales, and they bring down the values of surrounding properties.  The more distressed sales we have the harder it's going to be for homes to appreciate in value, so the decrease in distressed sales is very positive for our local real estate market.  Some areas of Tallahassee fared better than others.  For instance, southwest Tallahassee was the biggest loser out of all four quadrants of Tallahassee in the 4th quarter of 2015.  SW Tallahassee saw the biggest drop in home prices.  At the same time,  properties in the northwest seemed to do pretty well.  In northwest Tallahassee we saw prices, sales and the number of properties listed for sale all go up while the average days on the market it took to sell a home and distressed sales both went down.   Southeast and Northeast Tallahassee both saw modest decreases in home values as well as in sales and listing activity.   Overall I think our real estate market in Tallahassee is doing well and remained healthy in the 4th quarter of 2015.  The nearly 20% year over year increase in home prices that we saw in the early part of 2015 was clearly not a sustainable rate of increase, and the decrease in value we saw in the 4th quarter was just the market correcting itself from such sharp gains recognized earlier in the year.  Another point worth noting is that the new government imposed regulations on mortgages which is known as TRID (Tila Respa Integrated Disclosure) rules went into effect on October 3rd.  The TRID rules make the closing process take longer which most likely resulted in many closings that would have normally closed in 2015 get pushed into 2016.  If not for the new TRID rules, it's very likely we would have seen more closings take place in the 4th quarter of 2015.   Interest rates also creeped up a little bit in the 4th quarter of 2015, and the stock market began to fall as well.  These two things also could have had somewhat of a dampening affect on buyer activity in the 4th quarter of 2015.  I would expect the real estate market in Tallahassee to take off early in the year in 2016 the same way it has the past couple of years.  I would expect activity to pick up in January and February, and by March the selling season should be in full swing. I would expect both sales and listings activity to increase early in the year while home values should remain flat or see very modest increases compared to the same time a year ago.   Two major developments in Tallahassee that should bring more jobs to Tallahassee are the new VA Hospital on the corner of Blairstone Road and Orange Avenue that is suppose to open up this year and also the new Tallahassee Center (formerly the Tallahassee Mall) which is set to open in Spring of this year.  Both of these developments will bring new jobs to Tallahassee which will help bolster our local economy which in turn will strengthen our local real estate market. Just a tip...if you are an investor looking at  purchasing rental properties...it may be a good idea to look for deals near these two new developments.  These new jobs from the new devopements mean there will be people looking for housing close to their new jobs.  Feel free to call me with any questions about properties in these areas.   A summary of the 4th quarter year over year residential real estate market statistics for Leon County is below.   Tallahassee as a whole   Listings increased by less than 1 percent (1073 properties listed) Sales increased by less than 1% (815 properties sold) Average sale price decreased by 6.1% (Average sale price was $174,807) Average Sale price/list price ratio decreased by 0.16% (average sale price to list price ratio was 96.57%) Average days on the market decreased by 15.7% ( average days on the market was 86 days) Proportion of distressed sales to total sales decreased by 4.2% (distressed sales made up 13.7% of total sales)    Northeast Tallahassee   Listings decreased by 4.1% (489 properties listed for sale) Sales decreased by 6.7% ( 389 properties sold)  Average price decreased by 3.3% (Average sale price was $230,808) Sale price/list price ratio decreased by 0.24% (sale price to listing price ratio was 97.35%)  Average days on the market decreased by 10.87% ( average days on the market was 82 days) The proportion of distressed sales to total sales decreased by 2.6%. (distressed sales made up 10.3% of all sales)    Northwest Tallahassee Listings increased by 10.7%. (342 properties listed for sale) Sales increased by 14% (245 properties sold)  Average sale price increased by 1.9%  (Average sale price was $124,304)  Average sale price/list price ratio decreased by 0.44% (average sale price/listing price ratio was 95.39%) Average days on the market before a home sold decreased by 24.8% ( the average home sold in 85 days)  The proportion of distressed sales compared to total sales decreased by 7.5% (distressed sales made up 17.6% of all sales)    Southeast Tallahassee   Listings increased by 6.5% (165 total properties listed  for sale  Sales decreased by 5.5% (121 properties sold)  Average prices decreased by 5.9% (average sales price was $153,648) Average sale price/list price ratio decreased by 1.43% ( average sale price/listing price ratio was 95.28%)  Average days on the market before a home sold increased by 1.43% (home sold on average after 99 days on the market) The proportion of distressed sales compared to total sales decreased by 4.9% (distressed sales made up 10.7% of all sales) Southwest Tallahassee Listings decreased by 19.8% (77 properties listed for sale)  Sales increased by 11.1% (60 properties sold) Average sales price decreased by 33.4% ($60,620)  Average sale price/listing price ratio increased by 0.5% (Average sale price/listing price ratio was 94.5%)   Average days on the market before a property sold decreased by 40.1% (It took 93 days on average for a home to sell) The proportion of distressed sales compared to total sales decreased by 6.6% (distressed sales made up 26.7% of total sales)

Tallahassee 3rd quarter real estate market update.

3rd quarter 2015 Tallahassee Residential Real Estate Market Snapshot And Year Over Year Market Statistics.

The real estate market here in Leon County shifted gears quite a bit in the 3rd quarter of 2015 compared to what we saw over the past few previous quarters.  By no means would I say that the local real estate market here in Tallahassee is doing bad, but I would certainly say it is cooling off and seems to be cooling off big time. This is especially the case when you compare the 3rd quarter numbers to the numbers we saw in the 2nd quarter of this year. While we saw double digit percentage year over year price increases in the 2nd quarter of this year, the year over year home prices in the 3rd quarter of this year pretty much stayed the same only increasing by a very meager half of a percent. It's like the home price truck was cruising along at 80 miles per hour then all of a sudden slammed on the brakes.   Other than home prices though, all of the other metrics I looked at to gauge the status of our local real estate market seemed to look good. We saw a small increase in the number of listings from the same period one year ago. We saw a very healthy increase in the total number of residential properties that sold.  The average time it took to sell a property went down quite a bit. The average sale price/listing price ratio (what a home sells for compared to what it's listed for sale at) pretty much stayed about the same only going down 0.7%.  Last but not least, distressed sales (foreclosures and short sales) made up a smaller percentage of total sales then compared to the 3rd quarter in 2014.  Overall the market looked pretty good. The we did not see the staggering gains that we saw in the 2nd quarter but overall most of the numbers were healthy.  The only metric that lagged in this 3rd quarter of this year was average home prices. 

Let's start off looking at the number of listings and total sales.  As you have probably heard by now, we are in a sellers market. This means that we have a shortage of housing inventory compared to the demand for housing. This has fueled price increases over the past couple years and has also fueled home buyers's frustrations.  In the 3rd quarter of this year we saw a 2.3% increase in the number of properties listed for sale compared to the same time a year ago.  While we wish that number could be a little bit higher, the slight increase in the amount of homes available for sale is very much a good sign.  The price increases of the past couple years have lifted a lot of people out of the doldrums of negative equity to where they can actually sell their homes now and not lose money at closing. This along with the increased overall confidence in the marketplace from the positive gains we have seen over the past couple years should cause this trend of growing housing inventory to continue in the near future. I think the trend of increasing housing inventory will be a very slow but steady trend.  The sellers market caused by a lack of housing inventory could last for a while though. 

Total home sales continued to be robust in the 3rd quarter of this year. The market in Leon County saw a strong 13.3% increase in total home sales compared to the same time period a year earlier.  Continued job growth, the return of of people with foreclosures and short sales on their records to the home buying market and the increase in the number of Millennial home buyers in the market place has continued to fuel home sales. This trend will likely continue due to the fact that improvements in the economy seem to be fundamentally strong and lasting. 

Usually when you have a situation where percentage gains in home sales are far exceeding increases in housing inventory you get price increases.  It's the old economic principal of when demand exceeds supply prices go up.  For some reason this quarter that principal did not really seem to apply.  Despite the fact that demand far exceeded new supply of housing inventory, year over year prices pretty much were at a stand still compared to the same time last year. We saw only about one half of a percent increase in average year over year home prices in the 3rd quarter of this year.  In the 2nd quarter of this year the we saw over a 16% increase in the year over year price increases. A 16% yearly increase is obviously not a sustainable level of price appreciation so it's possible that the market is just correcting itself due to the fact that price increases in the 2nd quarter were so robust. That is the only feasible explanation I can come up with to explain the major slow down in price growth in the 3rd quarter of this year. 

The next two metrics to look at are the sale price/listing price ratio (which compares what a home sells for on average to what the home is listed for) and also the average days on the market before a home sold. The average sale price to list price ratio stayed about the same in the 3rd quarter of this year as it was the same time a year ago.  In the 3rd quarter of this year the average home sold for 96.92% of what it was listed for sale at. Last year it was 96.99%.  A sale price/list price ratio of nearly 97% is a very strong number and is very much indicative of the fact that we are in a sellers market still. 

Average days on the market went down quite a bit with average time on the market before a home sold going down by 16.3% compared to the same time a year ago. Again this is another metric that supports the fact that we are in a sellers market right now. 

Last but certainly not least, let's take a look at distressed sales. Distressed sales are foreclosure sales and short sales. These properties sell at a discount and bring down property values of surrounding properties. They are bad news for the overall health of the real estate market.  That is why it's a very good thing that distressed sales continued to make up a smaller percentage of total sales here in Tallahassee compared to the same time a year ago. In the 3rd quarter of 2015 distressed sales only made up 10.03% of total sales compared to 15.85% of total sales during the same period a year prior.  A few years ago during the height of the foreclosure crisis, distressed sales made up about a third of home sales here in Leon County. While we still have some work to do to get that level down, we have come a long way at working our way through the inventory of distressed sales. 

Overall I would say that the market here in Leon County is still strong, and the fundamentals of our market are still good. Sales are still increasing, the average time it took to sell a home went down, the average home is selling for very close to what it's listed for sale at, and more people are putting their homes on the market to help out with alleviating the shortage of housing inventory. While home prices did not go up this quarter, they did remain stable from a year ago. Like I said above, I think the slow down in price growth is just the market's  natural reaction to the sharp price increases we saw earlier in the year. Prices can't continue to go up at double digit annual percentage gains.  If they did prices would get out of control and no one would be able to afford a home. 

In the near future look out for possible increases in the interest rates.  The Federal Reserve has been talking about increasing the Federal Funds Rate which will in turn increase mortgage rates.  It's expected that they will increase the rates this year.  This could have a dampening effect on home sales and prices.  Although the increase in rates will most likely be very small, so the effect on prices and sales will most likely be small.  The increase in rates could have a negative effect on stock prices as well though which could in turn lead to a decrease in consumer confidence which could also dampen home sales. As long as job growth continues to get better though the market should continue on the stable path that it's currently on. 

 

A summary of the 3rd quarter year over year residential real estate market statistics for Leon County is below.

 

Tallahassee as a whole

 

• Listings increased by 2.3% (1,456 properties listed for sale)

• Sales increased by 13.3% (1087 properties sold) 

• Average prices increased by 0.5%. (Average sale price was $191,481)

• Sale price/list price ratio decreased by 0.07% ( 96.92%) 

• Average days on the market decreased by 16.3% (82 days)

• Proportion of distressed sales to total sales decreased by 5.82% (distressed sales made up 10.02% of total sales). 

 

Northeast Tallahassee

 

• Listings decreased by 1.5% (716 properties listed for sale) 

• Sales increased by 18.27% ( 589 properties sold) 

• Average price decreased by 0.7% ( average sale price was $249,466)

• Sale price/list price ratio decreased by 0.43% ( 96.87%) 

• Average days on the market decreased by 23.5% (75 days on the market) 

• The proportion of distressed sales to total sales decreased by 3.24%. (Distressed sales made up 6.8% of total sales)

 

Northwest Tallahassee

 

• Listings increased by 4.6% (413 properties listed for sale) 

• Sales increased by 11.93% ( 272 properties sold) 

• Average sale price increased by 5.4%(Average sale price was $119,046) 

• Average sale price/list price ratio increased by 0.43% (97.04%) 

• Average days on the market before a home sold decreased by 17.8% (79 days) 

• The proportion of distressed sales compared to total sales decreased by 8.9%.  (distressed sales made up 12.5% of total sales). 

 

Southeast Tallahassee

 

• Listings increased by 2.9% (215 properties listed for sale) 

• Sales decreased by 2.6% (152 properties sold) 

• Average prices decreased by 7.86% (average sale price ($154,630) 

• Average sale price/list price ratio increased by 0.82% (97.32%) 

• Average days on the market before a home sold decreased by 17.3% (78 days) 

• The proportion of distressed sales compared to total sales decreased by 9.3%. ( Distressed sales made up 12.5% of total sales) 

Southwest Tallahassee

• Listings increased by 21.7% (112 properties listed) 

• Sales increased by 19.4% ( total number of sales 74)

• Average price increased by 9.3% (average property sold for $71,882) 

• Average sale price/listing price ratio increased by 2.19% (95.77%) 

• Average days on the market before a property sold increased by 34.7% (163 days) 

• The proportion of distressed sales compared to total sales decreased by 4.2%.  (distressed sales made up 21.6% of total sales). 

Tallahassee Residential Real Estate 2nd Quarter Market Update.

Bobby's Real Estate Column

     Tallahassee's residential real estate market is certainly heating up hear in Tallahassee.  Double digit percentage increases in both home sales and home prices coupled with a slight decrease in the number of properties listed for sale pretty much was the main theme of Tallahassee's real estate market in the 2nd quarter of this year. We also saw a sharp decrease in distressed sales (short sales and foreclosures) in Tallahassee which is contributed to improving our real estate market in the 2nd quarter.   As the economy continues to improve, more jobs are being created, and that means there are more people with steady incomes who are jumping into the market to buy a home.  Also, we are now about 7 years out from the collapse of the real estate market and the start of the great recession, and the first wave of homeowners who lost their home to foreclosure or short sale from the recession are finally jumping back into the market to buy homes as lenders are finally willing to loan money to those people to buy homes again. Also, first time home buyers, especially those in millennial generation, are getting out of their parents basements and are now buying homes.

The effect of everything I mentioned above is that demand for homes is surging this year.  While the demand for homes is surging, the supply of homes for sale is actually going down.  Also, while home values are going up, there are still a lot of homeowners out there who are underwater on their mortgage which is keeping those home owners from selling their homes. There are also a lot of homeowners who took advantage of the historically low interest rates over the last 3 years who don't want to sell their homes and lose the 3%-4% fixed interest rate that they have on their mortgages.  These factors are keeping people from selling their homes which is constraining housing inventory.

In analyzing Tallahassee's residential real estate market in the 2nd quarter, let's first look at home sales  As mentioned above, we saw a surge in home sales in the 2nd quarter of 2015 compared to the same time a year prior.  In the 2nd quarter we saw an increase in home sales in Tallahassee of 13.3% compared to the the 2nd quarter of 2014.  In certain areas of Tallahassee the increase is even higher.  For instance, in Northeast Tallahassee home sales increased by a whopping 23.8%!

Now that we talked about home sales (a.k.a. the demand for homes) let's now look at the figures for property listings (a.k.a. the supply of homes).  Overall, Tallahassee saw a 1.9% decrease in the number of properties listed for sale in the 2nd quarter of 2015 compared to the same time a year earlier.  Normally such a slight decrease in the number of homes listed for sale would not have a major impact on our market, but when you have a 13.3% increase in home sales, any decrease in the number of homes listed for sale is going to be felt strongly in the marketplace by way of price increases which brings me to my next point...home prices.

As I mentioned above, we saw big surge in average home prices in Tallahassee in the 2nd quarter of 2015 compared to the 2nd quarter of 2014.  Specifically, we saw a 16.5% increase in average home values in the 2nd quarter of Tallahassee compared to the same time a year before.  To put this in perspective, a historically normal  annual increase in home values is between 3%-5%.  The annual increase in home values we saw in Tallahassee in the 2nd quarter of 2015 was 3 to 4 times more than the historical average.  That is a pretty serious increase.  In northeast Tallahassee home prices skyrocketed a whopping 20.5% in the 2nd quarter compared to the same time a year ago.

As we almost  reach the end of the 7th year since the full collapse of the real estate market and of the broader economy, the number of distressed sales (foreclosures and short sales) continued to decrease.  In the 2nd quarter of 2015 in Tallahassee distressed sales only made up 14.36% of total sales compared to 20.8% in the 2nd quarter of 2014.  Distressed sales typically sell at a discount compared to non distressed sales, and they bring down the value of surrounding properties.  The sharp decrease in distressed sales that we saw in the 2nd quarter was an instrumental part of the corresponding increase in home values that we saw in Tallahassee in the 2nd quarter of this year. New homes entering the foreclosure process are way down now since mortgage underwriting standards are so strict and have been the last few years. This means that we have far fewer mortgages entering foreclosure process while many of the foreclosure properties on the market are being sold off. This means that the trend of decreasing distressed sales is expected to continue.

On average homes took a little bit longer to sell in the 2nd quarter of 2015 compared to the same time a year earlier.  More specifically, homes sat on the market 4.6% longer in the 2nd quarter of 2015 before selling compared to the same time a year earlier.  With home prices going up so much this year I think that the slight increase the number of days it took to sell a home on average is normal.   Normally you have to market  a home for a longer period of time when you list a home at a higher price, so this is not much of a surprise. To put it in perspective, it only took 4 days longer on average to sell a home in the 2nd quarter of 2015 compared to the 2nd quarter of 2014.  This is a pretty small increase and is nothing to worry about.

The final metric that I looked at when analyzing our real estate market was the average sales price/listing price ratio.  In simple terms this is just looking at what the average home sells for compared to what it was listed for sale at.  Typically the higher the average sale price/list price ratio is, the stronger the market is.  In the 2nd quarter of 2015 the average sale price to list price ratio was 96.83% which means that the average home sold for 96.83% of what it was listed for sale at.  This was up very slightly from the 2nd quarter of 2014 when the average home sold for 96.79% of what it was listed at. In essence the average sale price to listing price ratio was about the same as it was last year. A sale price/listing price ratio of nearly 97% is indicative that we have a very strong demand for homes in our market, and this positive market metric is consistent with the surge in demand for homes that we have seen over the last year.

Overall the residential real estate market here in Tallahassee in the 2nd quarter of this year showed that it is very vibrant and healthy.  The strong demand that we have seen from buyers seems like its the product of a broader economic recovery, and is most likely a trend that will continue.  The challenge that we face here in our local real estate market is getting the increase in housing supply that we need in order to match the growing demand for homes that we are seeing.  Throughout town we are seeing more new construction going up, so hopefully the construction of new homes will help add to supply.  Also with prices going up so much it's likely that more sellers will begin to put their homes on the market when they realize how much prices have been going up.  I expect this will be the case, but I think it will take some time for homeowners to recognize the strong upward shift in home prices that is needed to spur them into taking action and putting their homes on the market. Unlike the stock market which reacts very quickly to information, the real estate market is very slow to change course.  I would say in the next year or so we should expect to see housing inventory go up though.

The other thing to watch for in the near future is increasing interest rates. After much talk about rising interest rates we have finally begun to see interest rates go up with the average 30 year fixed rate mortgage going above 4% again. Interest rates are expected to go up even more when the Federal Reserve raises the federal funds rate sometime later this year. The rate increase is suppose to be gradual, so it should not have any large detrimental effects on our real estate market.  In fact the increase could initially spur more home buyers into action who are hoping to lock in rates before they rise more which could help the market in the short term.  I would expect our real estate market to continue on the path we saw in the 2nd quarter, but in the next few months I would expect that the market will cool off some from the double digit increases we saw this Spring.

A summary of the 2nd quarter year over year residential real estate market statistics for Leon County is below.

Tallahassee as a whole

• Listings down 1.9% (1,729 properties listed for sale)
• Number of properties sold up 13.3% (1,149 properties sold)
• Average Sales Price up 16.5% (Average sales price $199,729)
• Average days on the market up 4.6% (91 days)
• Average sale price/listing price ratio up 0.04% ( 96.83%)
• Distressed sales (foreclosures and short sales) were down and only comprised 14.36% of total sales compared to 20.8% of total sales in the 2nd quarter of 2014. 

Northeast Tallahassee

• Listings down 2.6% (897 properties listed for sale)
• Number of properties sold up 23.8% (604 properties sold)
• Average sales price up 20.2% (Average sale price $263,981)
• Average days on the market up 6.8% (78 days)
• Average sale price/listing price ratio increased by 0.06% (97.23%) 
• Distressed sales only made up 10.4% of total sales compared to 19.5% the same time a year prior. 

Northwest Tallahassee

• Listings increased by 2.8% (475 properties listed for sale)
• Number of properties sold increased by 7.5% (316 properties sold)
• Average sale price up by 9.8% (Average sales price $127,879)
• Average days on the market increased by 12.6% (107 days)
• Average sales price to listing price ratio decreased by 0.02%  (95.7%)
• Distressed sales only made up 16.5% of total sales compared to 22.8% of total sales the same time a year earlier. 

Southeast Tallahassee

• Listings down by 7.3% (254 properties listed for sale)
• Sales up by 3.7% (167 properties sold)
• 11.96% DECREASE in average purchase price (Average sales price  $147,637)
• 2.2% decrease in average days on the market (91 days)
• Average sale price to listing price ratio decreased 0.44% (96.49%)
• Distressed sales went up slightly making up 19.2% of total sales compared to 18.6% of total sales the same time a year earlier

Southwest Tallahassee

• Listings decreased by 2.8% (103 properties listed for sale)
• Number of properties sold DECREASED by 12.7% (62 properties sold)
• Average sale price increased by 3.4% (Average sales price $80,302)
• 11.8% decrease in the average number of days on the market (127 days)
• Average sale price/listing price ratio increased by 2.19% (95.35%)
• Distressed sales made up a higher proportion of total sales comprising 29% of total sales in 2nd quarter of 2015 compared to 26.8% a year earlier.