I have received a lot of feedback from my recent blog about how buyers are getting excited about the great deals on homes in Summerbrooke. While everybody knows that real estate depreciation continues and that values have dropped over 25% since the peak of the market, sometimes it takes specific examples for the scope of the adjustment to really hit home.
One reader was going through the list of home sales in Summerbrooke and found a foreclosure sale that really stood out.
Hi Joe, Just a couple of minutes was all it took for me to see that 933 Summerbrooke sold for 565k in 2005 and that those folks were foreclosed by BOA. BOA then just sold the house in April for 404k. You better believe buyers are excited! I wonder how much BOA lost on this deal. Keep up the good work on those NE neighborhoods and their huge mortgages.
This is not an anomaly in the Tallahassee real estate market. We are seeing short sales and foreclosures creep more and more into the mainstream of what is occurring in both active listings as well as recent home sales. Based upon our tracking of lis pendens filings and foreclosure sales, we know that the bulk of distressed properties is only now showing up in the Tallahassee housing market and is driving real estate depreciation.
Lis Pendens And Foreclosures Are Major Cause Of Real Estate Depreciation
When we look at the real estate graph below, we see that the number of lis pendens filed in Leon County is finally starting to drop, while the number of foreclosure sales continues to rise. While this might not sound good, the fact is that these actions are what our housing market needs as we move to return to normal conditions.
The drop in lis pendens filings means fewer loans are going into default now than in recent years, and the rise in foreclosure sales means that banks are moving now to take action and clear the books of these toxic assets. Unfortunately, this will mean more inventory coming into the Tallahassee housing market and continued pressure on pricing, but it is a required step as we move to return to the "good 'ol days."
We won't see real estate depreciation return to appreciation until the supply of homes for sale in Tallahassee returns to an equilibrium level of 5 to 6 months of supply. Distressed properties entering the market only continues to feed the supply side, which currently registers at over a year's worth of supply of homes for sale in Tallahassee.
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.