Lately, we have identified the fact that it appears that we've reached the bottom of the housing market and in fact, we are seeing signs of increased home buyer activity. Yesterday's blog included real estate graphs that showed a rise in closed home sales as well as an increase in the new pending contracts., so I received a few comments and feedback from our regular readers.
One such comment/question about real estate in Tallahassee, Florida came from "Buddy" who wrote:
Joe.... Many of the Real Estate agents I talk to are experiencing an up-tic in activity, but most of them say it is in the $400K and below market on housing, and little or no activity in finished lot sales. I wonder if the data stream you are looking at can shed any light on the higher priced ranges for house sales, and has the lot sale market shown any improvement?
As always I look forward to your insightful analysis.
In order to answer Buddy's question, I went the Leon County Tax Assessors database of residential sales in Tallahassee. This includes single family detached homes, condos, and townhouses. In order to clarify market activity, I have created a real estate graph for existing home sales and then separately I have created one for new home sales. The results are somewhat surprising.
Tallahassee Existing Home Sales Slow At Higher Price Ranges
The trend for existing home sales in the $300K to $500K price ranges was far better than I thought it would be. Unfortunately, once we get about $500K, we see the slow sales that were expected.
In the real estate graph above, the vertical lines show the actual number of sales each month, while the sloping lines show the current trend for each price range. The $300K - $500K price range is showing a strong upwards trend and is represented in the graph in red. The green and purple show the higher price ranges which appear to have little to no growth, but happily neither one is trending downward.
Tallahassee Upper End New Home Sales Fairly Flat
The results for new home sales is not nearly as surprising. We are seeing very little activity about $500K (only 1 closing since March of this year) and the trend doesn't suggest anything changing for quite some time.
Tallahassee Residential Lot Sales Slowing As Well
One way to forecast movement in new home sales is by monitoring residential lot sales in Tallahassee. This is something that we have measured every month going all the way back to 1991, so there are no surprises here. The recent trend of lot sales in Tallahassee is fewer and cheaper.
Above, we see the red line showing the average lot price in Tallahassee has dropped below $73,000 and monthly lot sales (green) over the past year have dropped to just 42. Just one year ago monthly sales were at 60 lots and average prices were $10,000 higher. I suspect we will continue to see the average price drop as excess inventories of developed lots are consumed.
Upper End Housing Inventories High In Tallahassee
I know that Buddy was looking for some good news in these reports, but unfortunately they have pretty much confirmed what he knows to be true from his "on the street" experience. Homes above $400K have too much inventory and pricing pressures are tough right now.
One way to keep an eye on this is to download the monthly housing report (see sidebar on right) and look at the months of supply in each price range. Once we get to the $500K and up price points, months of supply exceed two years! This suggests to me that recovery for these homes has quite a ways to go.
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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.