4 Real Estate Trends Worth Watching

Now that the real estate market has departed from the traditionally hot summer season, I am anxiously observing the 4 Tallahassee MLS trends that should give us an indication of market strength. No matter what the media is saying about the real estate market, all we need to do is observe inventory movement to know where we are ultimately heading at any given time.

I think it would be prudent for anyone interested in the Tallahassee real estate market to follow these four trends very closely from now until we declare the market bottom, as I am quite certain they will reveal it even as it happens. Thus far, all that these trends have revealed is that the bottom has not been reached.

4 Critical Real Estate Trends

The four key trends that can be measured from the Tallahassee Board of Realtors Multiple Listing Service (Tallahassee MLS) include homes entering and leaving the market. They are represented by four key divisions.

• New Trend (Homes newly listed for sale) - As simple as it sounds, supply and demand is still the name of the game. Right now, buyers are nervous and there is plenty of inventory. This double-edge sword has increased the amount of "months of supply" of homes, as the number of buyers has fallen faster than the inventory has fallen. From the graph, we see that we are seeing just under 18 homes per day newly listed for sale.

  • Pend Trend (Homes recently under contract) - The homes that have recently come under contract do not necessarily predict what will sell in the future (as these are only contracts and many fail to close), but they are an indication of the strength of near-future sales. From the graph, we see that four contracts per day are being recorded, yet we are averaging 7 sales! (How do you sell more than you contract?)

  This bears close monitoring as we are either seeing the sales measurement "consuming" previously pended properties or we are seeing 3/7ths of the sold properties never pended, just posted as sales. Either way, I am keeping an eye on this and I suspect the final tally will show a little from each causation.

  • Sold Trend (Homes recently sold) - The purple line in the graph above shows us that roughly 7 homes per day are selling in the Tallahassee MLS. This is a larger margin than the difference between homes being listed and homes failing to sell, thus explaining the inventory reduction that we have been witnessing (finally) over the past 5 months.

  • Failed Trend (Homes recently off market, not sold) - Perhaps one measurement that nobody in the national media seems to report or understand is the "Failures", but many homes "fail" to sell on a regular basis. Sometimes the listing "expires" meaning that the term of the listing contract with the real estate company has run its full course without a sale. Another reason for a failure could include the homeowner changing their mind and canceling the listing. Regardless of the reason, we measure this category anytime a home is listed for sale and then taken off of the market without a successful sale.

  • The interesting point about this category is that the current failure trend in the Tallahassee real estate market is about 15 homes per day. The newly listed homes is just under 18 per day. Doing simple arithematic, one notes that the current failure rate is over 84%! That means that 5 out of 6 homes being listed right now are not selling for one reason or another.

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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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