The new data has arrived for the month of March and it appears that we have posted our 33rd consecutive month of declining home sales (when measured year over year). What this means is the March of 2009 was worse than March 2008 (and February 2009 was worse than February 2008, etc.) going all the way back to June 2006.
March sales dropped 21% compared to March of last year, and year-to-date home sales in Tallahassee have fallen 35% when compared to the first quarter of last year. I’m hoping that we are rapidly approaching the bottom of this housing market, as the current rate of sales is far lower than I ever would have believed possible.
Tallahassee Home Sales Graph (Year Over Year)
The rest of the country has started to see year-over-year improvements, so I suspect we are not far behind. When I started showing this report a few months ago, I predicted we would definitely see the streak of declining reports come to an end this year. I even stated that March would be the earliest it could possibly happen…. But apparently that is not going to be the case.
Tallahassee Single Family Home Sales Down 35% In 1st Quarter
Here is a real estate graph that really shows how tough the first quarter home sales were in Tallahassee.
You can see that our report begins in 1991, thus showing that in 19 years of collected real estate market data, 2009 is the absolute worst. I believe our county is over 30% more populous now than in 1991, so if you factor in the relative size of the market, this report is stunning.
But it also demonstrates a normal (albeit extreme) market over-correction to the booming years of 2004 through 2006. Home sales in 2008 were at record lows by quite a margin, yet Tallahassee home sales this year are off 35% from the pace set in 2008. This rate of decline can only go to zero, right?
We will soon be hitting a point where pent-up buyer demand is going to start to show. Tallahassee short sales and Tallahassee foreclosures are going to be offering deals that will motivate buyers to get off the sideline and get back into the market. While pricing pressure on sellers will be brutal for the next few years, the market will be rebounding. The key right now is to entice buyers back into the market and to get back to reasonable sales rates in the Tallahassee real estate market.
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As bad as the second graph it is, it seems there is still more room to go down. If you assume that the “correct” sell rate in the Tally market should have been 1,000 homes per year in the first quarter, then that means from 2002-2006, there were 1,500 homes more than normal that were sold. In 2007, the amount of homes sold was “about right” at about 1,000. The number of homes sold in 2008 and 2009 was about 1,200, a total of 800 less than the 2,000 that should have sold in a two year timeframe. While this is a big dropoff, it indicates that we are only about halfway through (800/1,500) the excess demand conditions experienced during the bubble.
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