We have dedicated quite a bit of discussion in the Tallahassee Real Estate Blog about housing inventory. The first major move that we have to see in order to declare that the turn has arrived in the Tallahassee real estate market is a long-term trend in inventory reduction. Thus far, we have seen our short and mid-term trends shift to inventory reduction and I believe the long-term trend change is just around the corner.
New Construction Trends Affect Housing Inventory
While common sense tells you that if we reduce or eliminate new construction, we will certainly slow the growth of inventory in the real estate market. Unfortunately, the housing market is not ruled by the "greater good" any more than any other market. Fortunately though, lending standards tighten and builders with inventory self-regulate and the market sees fewer new homes being built.
The graph above shows new single family home sales and permits in the Tallahassee real estate market (Leon County) with data beginning in January of 1996. The chart shows the one-year trend of each, permits and sales. On the far right of the graph we observe that our sales trend on new single family homes is around 65 per month, but at the height of the market a few years ago, it was 142 per month!
Some of the excess inventory issues in the Tallahassee real estate market were due to this "over building," and some of the reduction in inventory that we have seen over the past 100 days is due to reduced building. Looking at the entire data set, Leon County averages 93 new single family home sales per month since January of 1996, so the fact that we are currently permitting fewer than 70 is very good for the near-term future of the housing market in Tallahassee.
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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.