Real Estate Inventories Falling?

Posted by Joe Manausa on Thursday, July 3rd, 2008 at 10:23am.

I was asked by a local Realtor, Penny Herman, to help her prepare some market views for an upcoming interview on Fox Business News, a national broadcast which will occur on July 8th at 4:00 p.m. I've known Penny for years, and I can tell you she really hustles and she is a great role model for all of her peers in the industry.

Penny asked that I provide some insight into the current inventory situation in the Tallahassee real estate market. She had seen a prior blog of mine and wanted to be able to share some of the positive signs that we are seeing here in Tallahassee.

If you are a regular reader of the Tallahassee Real Estate Blog, than you have been seeing the general trend of rising inventories. This is not good. I have pointed out many times in the past that we cannot begin to talk about the market turning until we first see a turn in the flow of inventory. I think this is so important that I track inventory movement each and every day (with the great help of our Transaction Coordinator, Carol Palacios).

So, what do I mean by inventory flow? Simply put, I study two major groups of housing inventory each day. Properties that are newly listed for sale, and properties that are no longer for sale. The newly listed properties are ones that become "for sale" on that day, while the ones that are no longer for sale are ones that become "sold, canceled, expired or withdrawn" on that day. With these two groups, we can study inventory much like the tides at the beach. We look to see if the inventory is flowing in (growing) or flow out (declining). When the long-term trend turns to "declining," we will know that the start of the turn has occurred.

The long-term trend that I am looking for will be the 365 day trend. That trend will remove all seasonality and will establish the true current state of inventory flow in the Tallahassee real estate market. Unfortunately, I only started this measurement this year, so the best we can do for Penny Herman's real estate presentation is to review the 30, 60, and 90 day trends.

This first graph is the ninety-day trend  of inventory movement in the Tallahassee real estate market. The red area represents homes that are newly listed for sale, while the green area represents homes that are no longer on the market. The yellow area is the difference between the two. When the yellow area is above the "Zero (0.0)" line, we know that the trend still indicates that inventory is growing. The good news that we can take from this chart is that the rate of inventory growth is falling.

This next graph is the sixty-day trend  of inventory movement in the Tallahassee real estate market. The red area represents homes that are newly listed for sale, while the green area represents homes that are no longer on the market. The yellow area is the difference between the two. When the yellow area is above the "Zero (0.0)" line, we know that the trend still indicates that inventory is growing. The good news that we can take from this chart is that the rate of inventory growth has fallen below the zero line at times and it currently just over the zero line.

This final graph is the thirty-day trend  of inventory movement in the Tallahassee real estate market. The red area represents homes that are newly listed for sale, while the green area represents homes that are no longer on the market. The yellow area is the difference between the two. When the yellow area is above the "Zero (0.0)" line, we know that the trend still indicates that inventory is growing. The great news from this graph is that the short-term trend in our market shows inventory shrinking! This could be great news, but it is by no means proof of the market changing..... yet. We need to see this occur on a longer trend.

Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market.




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Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market.

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Joe Manausa is a real estate investor and the Broker and Co-Owner of Joe Manausa Real Estate. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.


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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.

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