We do a lot of work in the relocation industry (corporate moves and affinity relationships) and recently we were sent a request for information that I felt would make a great basis for a real estate blog for Tallahassee housing. Read the rest of this entry
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You might want to check out our Tallahassee Real Estate Inventory Update again. Every thirty days, I add another long-term trend chart with the goal of eventually having a 365-day trend chart. As you can tell, we just added the 120-day trend graph. Our goal is to monitor as many trends in real estate as possible.
With the feedback that I have received on our market update, I think it might be wise to discuss why we publish real estate trend analysis, rather than just charting the daily ups and downs of the market as do many other real estate web sites.
Actual inventory trend analysis helps us to understand the overall movement of our residential inventory over a period of time. Of all the trends in real estate that we study, inventory trends are the most important. The longer the period of time that we study, the less that “noise” affects our view.
So what is “noise” in our analysis of inventory in the Tallahassee market?
The best trend analysis that we can produce is the one-year trend. By constantly looking back 365 days, the analysis will be able to remove all random noise and give the reader the best view of the inventory flow in the real estate market.
And why is this so important? Because supply and demand economics will guide as to the direction of price movement. As a general rule, if supply is dropping, prices will begin to rise (unless something major has happened to demand). The contrary is true as well, as we are currently experiencing in Tallahassee real estate market. Our supply is increasing, and therefore we are seeing prices drop. The study of the supply trend will allow us to know when we should be able to see prices (and thus the market) turn back to appreciation.
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Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. 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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There has been some debate lately in the Tallahassee real estate market regarding how one would measure appreciation rates of homes in a given real estate market. Some people like to think that you compare the median home price in our market today with the median home price from a year ago, and that will show you the current appreciation.
I disagree.
Completely.
Vehemently.
Patently.
O.K. I’m out of big words.
I believe that the median home price cannot be used to measure appreciation because the median home itself does not remain constant. It’s not saying an apple a year ago cost $.29, and today it costs $.32, therefore it appreciated. You see, last year, after the end of the boom market, the median home size in Tallahassee might have been 2,000 square feet. Now that prices are dropping, but interest rates are so good, buyers might be choosing to spend the same amount of money but just purchase “more house for the money!” This year’s median home size could be 2,100 square feet. That means that we could see the median home price in Tallahassee stay flat, but still have depreciation occurring in our market.
Does that make sense?
Certainly.
Definitely.
Absolutely.
O.K. So now that we know how NOT to measure real estate appreciation, how about we tackle the issue itself?
I believe that a real math-whiz person could take a fair, random sampling of homes that have sold in Tallahassee and then run a simple analysis. This analysis would consider all homes that have sold recently and then see how much they have gained (or lost) since their last sale.
With that in mind, and understanding that I do not have the time to ensure that our sample is “fairly” random, or that I can tell you what my margin of error will be, I went ahead and grabbed 10% of the closed single-family home sales from the month of May in the Tallahassee real estate market. I made sure that the ones that I selected were “arms length” sales (meaning not family member to family member) and entered the information into a simple spreadsheet and found the following:
| Home Location | Previous
Sale Price |
Recent Sale Price | Previous
Sale Date |
Recent
Sale Date |
Annual Appreciation Rate |
| Buckeye Terrace | $215,000 | $208,000 | 4/30/2007 | 5/7/2008 | -3.19% |
| Tuscany Drive | $289,000 | $279,500 | 9/26/2006 | 5/9/2008 | -2.04% |
| Summertree Drive | $258,000 | $260,000 | 8/10/2006 | 5/12/2008 | 0.44% |
| Newman Lane | $273,000 | $247,000 | 2/28/2006 | 5/15/2008 | -4.43% |
| Hill Gail Trail | $195,900 | $200,000 | 12/9/2005 | 5/12/2008 | 0.86% |
| Cummings Avenue | $237,500 | $220,000 | 10/28/2005 | 5/15/2008 | -2.96% |
| Ivy Green Trail | $265,000 | $290,000 | 11/8/2004 | 5/19/2008 | 2.59% |
| Buckeye Terrace | $148,000 | $215,000 | 2/27/2004 | 4/30/2007 | 12.49% |
| Stonehenge Trail | $144,900 | $187,500 | 1/27/2004 | 5/16/2008 | 6.17% |
| Winter Lane | $153,000 | $200,000 | 8/1/2003 | 5/9/2008 | 5.77% |
| River Chase | $255,000 | $337,000 | 7/26/2002 | 5/8/2008 | 4.93% |
| Kingdom Drive | $118,000 | $167,000 | 2/25/2002 | 5/30/2008 | 5.70% |
| Layla Street | $105,000 | $150,000 | 7/19/2000 | 5/16/2008 | 4.66% |
| Conservancy | $243,000 | $435,000 | 7/16/1999 | 5/1/2008 | 6.84% |
| Ruthenia | $44,600 | $102,500 | 5/24/1999 | 5/23/2008 | 9.68% |
| Mallard Trace | $236,000 | $380,000 | 7/28/1998 | 5/23/2008 | 4.97% |
| Oldfield Drive | $127,500 | $238,000 | 6/3/1998 | 5/2/2008 | 6.49% |
| Paddington Drive | $112,800 | $230,500 | 8/20/1997 | 5/9/2008 | 6.89% |
| Whisper Way | $64,000 | $163,500 | 9/21/1994 | 5/22/2008 | 7.10% |
| Meadow Ridge Drive | $195,000 | $400,000 | 6/3/1994 | 5/29/2008 | 5.27% |
| Waverly Road | $215,000 | $310,000 | 4/15/1994 | 5/23/2008 | 2.63% |
| Man O War Trail | $78,800 | $175,000 | 3/3/1993 | 5/12/2008 | 5.39% |
| Hill ‘N Dale Street | $80,000 | $180,000 | 12/2/1991 | 5/2/2008 | 5.06% |
The average annual appreciation rate in this group is about 4% (3.97%). Anything purchased in 2005 or more recently in this group has depreciated. Any home purchased in 2004 or prior has appreciated. I suspect this means that properties were appreciating over time until the market peaked in 2005. Since then, the market has “taken some back.” If you purchased your home recently, it might be worth less than you paid. However, if you purchased it prior to 2005, most likely is still is worth more than you paid.
Take a close look at the home on Buckeye trace (it is listed twice in blue). It was sold after being purchased in 2007 and it was sold for 3% less than it had been purchased. But the prior owner, who owned it from 2004 to 2007, had an annual appreciation rate of 12.5%. The previous owner had perfect market timing, hitting the best two years of real estate appreciation that the Tallahassee real estate market has seen since I began measuring in 1991.
Most likely this data is too small of a sample to be absolute “proof” of anything, I would suspect these kind of numbers to hold true for the entire market. Home values peaked in 2005 and we are now seeing real estate depreciation in the Tallahassee real estate market.
If you would like to see the full Tallahassee Real Estate Market Report, just following the link to 12 new and updated color graphs.
As a reminder for those who subscribe to the Tallahassee Real Estate Blog by email, some embedded pictures and videos might not be appearing in your email and you might need to click the title header to go to your browser where all will be visible.
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 Century 21 First Realty. 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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Finally, the May figures are in for the Tallahassee real estate market. Unfortunately, sales of homes in Tallahassee were down 34.5% in May of 2008 versus May of last year. But some good news does seem to be on the way.
If you regularly check our continuously updated information on Tallahassee real estate, you might have noticed that our 30-day inventory trend has moved to “reducing,” while our 60-day is getting close to zero! This is BIG NEWS! We cannot expect this market to turn until we see inventories begin to fall.
If you would like to see the full Tallahassee Real Estate Market Report, just following the link to 12 new and updated color graphs.
As a reminder for those who subscribe to the Tallahassee Real Estate Blog by email, some embedded pictures and videos might not be appearing in your email and you might need to click the title header to go to your browser where all will be visible.
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 Century 21 First Realty. 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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Back during the days of the boom in the Tallahassee real estate market, we had people contract to buy a home in Tallahassee with no intent of owning it for any real period of time. These investors are known as “real estate speculators” and they have no intention of being in the market for a long time. They write a contract on a property, close on it, and then find buyers to whom they “flip” the property for a quick profit. Some are even able to sell the property before they even have to close on it for themselves.
Great booming real estate markets always create opportunities for flipping homes, but what happens is that this creates a “feeding frenzy” in the market, causing prices to shoot up faster than would happen without the speculators.
Well, five-years ago, lenders decided that it was too risky being involved in the end-deal of these flips. The Federal Housing Administration established a rule to deter these flipping speculators which imposed a 90-day waiting period before a home could be financed with a government-backed loan. This meant that flippers now had to own the home for more than 90 days before the could realistically sell it, thus increasing their risk of loss.
So why does this matter today? Because the White House just put a temporary freeze on this rule in order to help in the cause of selling foreclosed properties. “A glut of foreclosed and abandoned homes harms neighborhoods, frustrates home-buyers and delays a community’s recovery,” FHA commissioner Brian Montgomery said in a prepared statement.
I believe this is good news for a real estate market in need of good news. This will allow for an easier consumption process for distressed homes in the Tallahassee real estate market and will enable a quicker recovery of the market.
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Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. 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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Every month I like to take a reading of the inventory movement from the Tallahassee Board of Realtors Multiple Listing Service (MLS). This data source represents roughly 65% of what is happening in the Tallahassee real estate market and surrounding areas. The Tallahassee MLS records information about:
So what does the newest data tell us about inventory movement in the Tallahassee real estate market? Unfortunately, it tells us that we are still seeking the bottom of the market. Inventory levels are rising and sales trends are still falling. Throughout the five-county area, we have finally seen the inventory of housing reach 16 months of supply!
The key to finding the bottom and then turning this market around will be seen in the turn of the sales trend. We have seen prices drop quite a bit, but certain areas of the Tallahassee real estate market have not seen a whole lot of change. Beach properties are having the biggest impact on this graph and I suspect there is more blood that needs to be shed at the beach before we see the investors swoop in and start to scoop them up.
The sign to look for at the beach this summer is rental rates. If we start seeing all of the “flip” properties start to hit the rental market, then rental rates will have to start dropping dramatically. If the flip properties are still being held for sale, then the rental market will be less affected and rental rates will be strong. Once they are converted to rentals, we know the final step before the turn will have been reached.
The inland areas of the Tallahassee real estate market are struggling as well, just not nearly as much as the beach area markets. I will be publishing the Leon County Florida Real Estate Inventory Report within the next ten days and I suspect our inventory levels will be around the 11-month level. While 11 months of supply is no reason to rejoice, it sure beats a day at the beach!
As a reminder for those who subscribe to the Tallahassee Real Estate Blog by email, some embedded pictures and videos might not be appearing in your email and you might need to click the title header to go to your browser where all will be visible.
Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market.
If you like this Article then please subscribe to my blog through a full RSS feed. You will be able to stay informed about the happenings in the Tallahassee Real Estate Market. You can also subscribe to this blog and have it delivered by Email.
Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. 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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When the real estate market is challenged like it is today, the creative juices start flowing in the real estate professionals that have been operating in this business for a long, long time. Today, I want to highlight a very creative real estate brokerage process that many people have not experienced, and that is the trade of one piece of real estate for another.
The key to pulling off a successful real estate trade is to find the right parties with which to trade. Sometimes, a trade might involve three or more parties, but most likely, the trade will be between two different parties that are in serious need of getting rid of a property.
A whole other line of consideration for successful real estate trades is taxation, and I have written a series of blog articles on conducting 1031 Tax Deferred Exchanges. This is a subject matter that we will not be broaching today, but we will address this again in the future. Today’s focus is on using the real estate trade to get out of a real estate situation that one is presently in.
So, what types of trades are we seeing in the Tallahassee real estate market? There are types too numerous to count, but here are a select few that my office has conducted recently:
Homeowners trading their homes for a new home with a builder - The homeowner does not have to spend the time marketing their home (or allowing strangers access). The benefit to the homeowner is that they get a brand-new home from the builder and the benefit to the builder is that they trade a more expensive home for a lesser-expensive one, thus reducing the time it will take them to sell a home. This is a very popular real estate trade in today’s real estate climate.
Land owners trading lots for houses - There are many people in the Tallahassee real estate market who own vacant lots. They have to pay taxes and interest (or if the lot is owned free and clear, they lose the opportunity to invest that money for a greater rate of return). Many of these lot owners are trading their lots for income producing properties. For the lot owners, this real estate trade increases their rate of return on the investment they have made in their lot, and for the income property owner it allows them to build a new home or get rid of management issues with which they were dealing.
We have been doing some larger trading as well. Developers trading undeveloped land to builders who have large inventories. The benefit to the developer is that they get rid of the holding cost for their land and take-on homes that can generate some income. The benefit of this real estate trade to the builder is that they can get rid of older “bad” loans on homes and replace it with new “good” loans on new developments. This keeps their companies building and making money. The key is to take-on developments that the market will consume in today’s real estate market.
Today we are attempting a real estate trade involving a large develop-able piece of land for a newly constructed home in the Tallahassee real estate market. The benefits for all parties make me think the trade will work:
I suspect this will be a win-win-win scenario for all the parties, and this is the key to all successful real estate trades. I have never seen a trade where one side gets burned and the other side(s) make-out like a bandit. All parties have to win in a real estate trade or it just doesn’t work.
If you do, why don’t you post a comment below, and start it off with “I would like to trade _____” and end it with “I am willing to consider ______________” as part of the real estate trade. You can also just send me a note at E-mail Joe Manausa and let me know what you are trying to accomplish
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Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. 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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Perhaps the question that I get more often than any other is “What do you see happening in the future of the Tallahassee real estate market?”
Unfortunately, I do not have a crystal ball, but I do have data on hand that has been recorded since 1991 and I’m thinking that there might be a way to extrapolate a housing consumption estimate for the future by looking at what has happened in the past.
I have a housing consumption formula that I have produced for this blog posting and I would love to see comments from readers regarding any errors in the model or just commenting on the results of the analysis.
My formula has two key points:
º There always exist two types of housing consumers - Discretionary and non-discretionary
º The non-discretionary buyers can be predicted by looking at population changes
Discretionary home consumers are people who buy a home simply because they want to make a move. They typically have just undergone a “life event” that created some type of desire to make a move, whereas non-discretionary buyers pretty much have to move. They have been relocated from one market area to another or have had something happen that requires them to move. While there is certainly some “gray area” between these two extremes, I will consider everybody in either one or the other category when trying to determine a housing consumption estimation.
The demand side of the housing consumption issue is the number of potential buyers for homes in the Tallahassee real estate market. And contrary to popular belief, the number of potential buyers remains relatively constant, moving as the population moves. It is the perception of value that causes more people to consume or the lack of perception of value that causes people to not make a move.
In most markets where the population is changing (whether growing or receding), you can expect the non-discretionary consumer pool to be changing at that same rate. It is this relationship between population change and non-discretionary consumption that might allow one to predict future housing consumption in any given real estate market. The graph below projects my prediction of the housing consumption in the Tallahassee real estate market through 2010. This includes both discretionary and non-discretionary buyers, and is accurate to .0000001% (just kidding).
| Year |
Population |
Homes Sold |
| 2001 |
239,142 |
5,441 |
| 2002 |
239,573 |
5,977 |
| 2003 |
242,300 |
6,657 |
| 2004 |
242,910 |
7,090 |
| 2005 |
244,220 |
7,805 |
| 2006 |
245,625 |
7,089 |
| 2007 |
246,669 |
4,960 |
| 2008 |
247,519 |
4,390 |
| 2009 |
248,373 |
5,281 |
| 2010 |
249,229 |
5,851 |
While I will keep my formula for predicting the home sales private for right now, I will disclose that discretionary buyer habits are predictable over a long period of time, but tougher to predict over a shorter term. Looking at the table above, I have predicted 4,390 home sales for the Tallahassee real estate market in 2008. Any error in this number can be applied to the following two years, meaning the predictive model projects housing consumption to be roughly 15,522 for the three years of 2008-2010. Additionally, all population numbers in the past came from the US Census, while the future numbers are my estimates based upon the recent trend of growth in Leon County.
I encourage all the math-wizzes out there to comment on the reasoning in my model. I would like to continue working on the “special sauce” and then start applying it other real estate markets across the United States.
As a reminder for those who subscribe to the Tallahassee Real Estate Blog by email, some embedded pictures and videos might not be appearing in your email and you might need to click the title header to go to your browser where all will be visible.
Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market.
If you like this Article then please subscribe to my blog through a full RSS feed. You will be able to stay informed about the happenings in the Tallahassee Real Estate Market. You can also subscribe to this blog and have it delivered by Email.
Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. 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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Tallahassee Real Estate market data is in for April.
The month of April saw a continuation of the depressed market in Tallahassee. Unit sales were very low for April (which is normally a very good month) in the Tallahassee real estate market. Below are 12 different charts which through the link below them will demonstrate different aspects of Tallahassee real estate activity during the month of April.
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As a reminder for those who subscribe to the Tallahassee Real Estate Blog by email, some embedded pictures and videos might not be appearing in your email and you might need to click the title header to go to your browser where all will be visible.
Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market.
If you like this Article then please subscribe to my blog through a full RSS feed. You will be able to stay informed about the happenings in the Tallahassee Real Estate Market. You can also subscribe to this blog and have it delivered by Email.
Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. 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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Every so often, I like to take a detailed look at residential sales in the Tallahassee real estate market. By downloading all of the sales from the Tallahassee Board of Realtors Multiple Listing Service (MLS), I am able to graph some trends that might not be so readily evident from the general market reports that are published without scrutiny from the Florida Association of Realtors.
For the purpose of this study, we will define residential sales in the Tallahassee real estate market as the sales of condominiums and townhouses (CT) plus the sales of single-family detached homes (DET) in Leon County, Florida. These abbreviations are used in the following graphs to differentiate the unit types.
The first graph depicts units sales (quantity) for the months of January through April for each year. We can see that the market peaked in 2006 and has been settling back since. Based upon these units sales figures, we can see that the first four months of sales in the Tallahassee real estate market were down 54% from the height of the market.
is stable or has grown (interest rates are low, employment is strong) and so even while prices drop (see next chart), the average price stays the same because buyers are buying bigger homes.The final graph, one that I do not see reported elsewhere, shows the relative price of homes in the Tallahassee real estate market is actually dropping. By looking across the Tallahassee MLS and focusing on price per foot, we can see that this figure is dropping since the height of the market. The average price per foot is down a little over 4%, and I would view this as the real pricing change in the Tallahassee real estate market since the height of home prices last year.
As a reminder for those who subscribe to the Tallahassee Real Estate Blog by email, some embedded pictures and videos might not be appearing in your email and you might need to click the title header to go to your browser where all will be visible.
Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market.
If you like this Article then please subscribe to my blog through a full RSS feed. You will be able to stay informed about the happenings in the Tallahassee Real Estate Market. You can also subscribe to this blog and have it delivered by Email.
Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. 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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