4 Reasons Townhome And Condominium Sales Will Soar In 2017 And Beyond
The market for condominiums and townhouses is growing, and that rate of growth is only going to strengthen if Tallahassee behaves like most other metropolitan areas.
With shortages on the horizon for the lower 90% of the market, it's likely we'll see these two types of attached housing become the builders' product of choice.
Condos For Sale In Tallahassee
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If you would like to see all the townhomes listed in the Tallahassee MLS, you can find them HERE.
4 Reasons Townhome And Condominium Sales Will Soar In 2017 And Beyond
If you don't subscribe to our one-page "Weekly Special Housing Report," then you likely did not see the graph and write-up on condo and townhouse sales in Tallahassee. We have some solid reasons to believe the market will be moving towards "attached" housing and multi-family housing.
Why?
Because there are four indisputable market movements that I believe can only lead to a change in the new construction market in Tallahassee.
- Rising Cost of Land - Right now, much of the new homes being built and sold are on lots that have gone through the foreclosure process at least one time. This means they were sold to the builders at prices which cannot be replicated today, and often times these prices are a mere fraction of today's costs. Ask any developer, Leon County is an expensive place to develop. The ignorance of our city planners, pushing past-overlooked needs onto the budgets of today's new developments means that consumers (read that as you and I) are paying a premium for the opportunity to have a home in Leon County. This poor judgement will only increase our land costs and will impact us in two very specific ways. First, homes being more expensive means builders will have to put more houses on smaller lots and second, developers will look to the surrounding counties to bring in homes that are affordable to people working in Leon County.
- Rising Cost of Construction - Minimum wage has risen 44% in the past ten years, and you can be assured that the cost to bring new homes to the market has risen as well. Sticks, bricks and labor are all impacted by rising labor costs, so don't expect to see new homes built under $300,000 once the existing inventory of lots is extinguished.
- Falling Supply of Available Homes - Tallahassee has had a glut of homes for sale since 2006, but the market has finally consumed all excess below $350,000 and is now moving towards a seller's market. This means we need more homes priced below $350,000 ... but builders cannot supply single family "detached" homes in new developments in Leon County at these prices. Expect to see more permits popping up for multi-family, condominiums, and town homes.
- Inevitable Rise Of Mortgage Interest Rates - Last but not least is the eventual rise in mortgage interest rates. Our market has flourished from the availability of cheap money, but what is going to happen when rates rise? Do you even realize that today's mortgage interest rates are less than 1/2 of normal (past fifty year average)? Nearly 3 of every 4 homebuyers borrows money to purchase their homes, and currently buyers are enjoying AWESOME affordability. But rising rates will reduce this benefit and it will mean that people will not be able to spend as much money on housing. This is yet another reason why less expensive homes will need to be built, and single family detached homes will not be able to hit the demanded prices.
This is not to say that we will no longer build single family detached homes, rather the point is to show that the ratio of "detached" to "attached" is going to change to the benefit of the latter. I would think within the next ten years, there will be more condos and town homes built than single family detached homes.
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I am pretty sure that in ten years, we will look back and realize that 2012 through early 2017 was the best time to ever buy a house in Tallahassee. The combination of fallen prices, lower interest rates, and high levels of supply have made for some great deals. This will continue past 2017 for homes priced in the top 1% of our market ($600K and up), but for the bottom 99%, it will become a market for seller's and balance.
If you have been thinking about making a move, don't miss out on this low interest rate market. We cannot expect 3.5% money to be around forever, and when it is gone, it will likely be gone for another 50+ years or so. If you know you do not want to move, you should speak with a mortgage lender about refinancing your home to lock in this cheap money. Trust me, ten years from now you'll recognize it as a brilliant financial move.
Can I help? Simply drop me a note if you want to discuss your situation and your options.
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