How To Graph A Market Correction

Posted by Joe Manausa on Friday, August 29th, 2008 at 8:38am.

They say that a picture is worth a thousand words, and if that is the case, today's blog is going to be about 1,200 words. I have produced a graph that shows the number of Tallahassee home sales each year, sorted by type and style, that clearly demonstrates the market correction in which we are still languishing. While it is no fun to see the Leon County real estate market down 50% from the top of the market, it is nice to know that this is a natural part of the real estate sales cycle and that we will see an opposite reaction in the future.

Tallahassee Homes Sales Down 50% From 2006

Graph of home sales in Tallahassee Note that this graph reads from right to left and that it includes all types of residential real estate including single family detached (RS) as well as condominiums and townhouses (CT). The blue bar shows new home sales, the garnet bar shows resales, and the gold bar is the total of the two. Letting your eyes walk from right to left, the yellow bar represents all Tallahassee home sales through July of each year, and you can see how the market moved upwards for six straight years, then plummeted over the next two years. While it is no fun to see the market correct this sharply, one must also recognize the downward move is much sharper than was the upward move, meaning we are correcting this on a fairly rapid pace and the end of the downward spiral is near. We are already observing receding inventories (though inventories are still way too high) and if the real estate market trends that we are tracking now hold throughout the end of the year, I think 2009 will be considered the year that the market came back. Time will tell.... I'll be here.
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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.

2 Responses to "How To Graph A Market Correction"

Joe Manausa wrote: Hey Chris,

I think that is the million dollar question, but I would not say that shrinking inventory is to be expected "this time of year" when looking at a 6 month trend. I know that March through August produces more home sales historically then September through February, but historically we see more homes listed (coming on to the market) during this time period too.

Posted on Saturday, August 30th, 2008 at 11:05am.

Steve wrote: I agree that the end is near as far as the bottom of the market is concerned. In Pensacola, we are already seeing more investor activity which is a good sign since the experienced investors are generally the first ones out of the market when it gets too hot, and they are also the first ones back in during a recovery.

Posted on Tuesday, September 9th, 2008 at 10:15am.

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