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The Tallahassee MLS is an excellent source of information when you want to compare supply with demand. We can pull a lot of useful information out of the MLS when we compare active listings and past home sales, but one of the most important trends that I like to follow is the "Relative Supply" trend. We use this to measure housing consumption, or the rate at which homes are being purchased.
The relative supply is the number of homes available, measured in months of supply, when compared to the previous years rate of sales. While we know that the actual supply of homes for sale in Tallahassee has been dropping, we need to also keep our eye on the relative supply.
Relative Home Supply In Tallahassee Continues To Rise
The following graph depicts the current active residential listings (homes for sale) in red, each months sales of homes in green, and then the computed months of supply of homes in blue (total inventory based upon the current rate of home sales).
Looking at the red active listings line, we can see how the number of homes for sale fell off quite a bit from last year, but has since leveled off in 2009.
Unfortunately, the number of green home sales has stayed well below the normal rate, thus pushing the blue months of supply upwards of 15 months!
Simply put, at our current rate of sales, we have enough homes on the market currently to cover demand for the next one year and three months.
Home sellers need to understand housing consumption rates and relative home supply. So many people are putting their homes on the market at last year’s prices, only to see buyers not even take a look at them. If you really want to sell a home in Tallahassee, you have to understand what is going on in the market and what is going on in your specific price range.
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Joe Manausa, MBA is a 26 year veteran of real estate brokerage in Tallahassee, Florida and has owned and managed his own company since 1992. He is a daily blogger with content that focuses on real estate analytics and providing his clients with a tactical advantage in today's challenging market.