Existing Home Sales Topped All But Four Of Past 26 Years
The 2016 calendar year was the fifth best year of the past 26 years for existing home sales in Tallahassee.
People who have been needing to sell a home in Tallahassee can finally pack up and move.
In the graph above, the number of existing homes (single family detached homes, condominiums, and townhouses ... excluding new construction) sold are measured each year. Note that the sales in 2016 were slightly higher than in 2002 and almost as much as what was recorded in 2006.
The demand for existing homes is back, and if we see enough sellers enter the market, 2017 is likely to surpass all but 2005 in terms of the number of homes sold in a year.
Supply And Demand For Homes In Tallahassee
As with any market, the real estate market is heavily influenced by the supply and demand for homes. When the supply of homes exceeds demand (2006 through 2012), then home values fall. Of course, the opposite is true as well. The demand for homes has finally surpassed supply, and we forecast far higher than normal appreciation rates for homes in Tallahassee in 2017.
Also in normal markets, when demand exceeds supply, producers come forward to deliver more supply. In the housing market, this could be existing homeowners listing their homes on the market, or it could be home builders creating more homes for the Tallahassee real estate market.
While we expect some of the former to happen, it appears as if we have finally consumed the glut of the shadow inventory in Tallahassee and now we are looking for new home sales to help bring in the rest of the demanded supply. But there is a problem.
Due to the skyrocketing costs associated to building a home in Tallahassee (think Leon County/City of Tallahassee Government), it is not realistic that builders can produce single family detached homes much longer at prices below $300,000. And worst of all, once the supply of previously developed lots is exhausted, Developers tell me you can expect to see no new single family detached homes built for below $400,000 in Leon County or Tallahassee. They tell me it is as much as $90,000 per home cheaper to build in surrounding counties due to the regulations and taxes being imposed on builders and developers here.
So expect to see more expensive homes built (for who knows who) here and attached home developments becoming more popular to make new homes affordable. Duplexes, triplexes, and quads will become far more normal for new construction than are single family detached homes in Tallahassee in the years to come.
So what do you do?
Existing Home Sales Reveal Opportunity For Tallahassee Buyers
If you have been thinking about making a move, or if you figured you needed to wait a few more years for the dream home you desire, you really need to reconsider current market conditions.
Normally if you buy a home, you hope to enjoy an annual appreciation rate of about 3.5% per year over time. But due to the fact that our local government is pushing the cost of new homes higher, we are going to see existing home values move higher at a greater rate over the next few years. This means that somebody who purchases from 2012 through 2017 will be building equity in their home at a far faster rate than what has been historically "normal" in Tallahassee.
Does this mean that "now is the time to buy" for everybody? Absolutely not. If your family goals and objectives are bigger than the housing market, then "no." If you plan to leave Tallahassee in less than three years, then buying a home is not going to have the same upside as if you plan to be here for five or more years. Remember, if you currently own a home, it too is likely to enjoy this high rate of appreciation during the same time.
So here's what I recommend. If you were thinking of a "move up" purchase, now is a fantastic time to create wealth for your family with the purchase of an existing home in the market. If you were planning a "move down," you really are in no hurry, as the home you are in will be gaining more equity than a less expensive home that you buy. Move-down buyers have no market-driven urgency as do the move-up buyers.
How To Monitor The Tallahassee Real Estate Market
Whether you are looking to buy a home today or are simply a homeowner in Tallahassee, I recommend you monitor the Tallahassee housing market so that you are aware of changes and opportunities that present themselves. Did you know you could be well informed with a mere 5 minute commitment each week?
If you subscribe to the Tallahassee Real Estate Newsletter (below), you will receive a one-page report each Monday morning that gives you a single snapshot of a market trend that is occurring. Most of our readers glance it over and delete the email, all in less than 5 minutes per month. But they also send us "thank-you's" for the ease and simplicity of staying informed.
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If you would like to know more about how the existing home sales market is creating opportunity for prospective buyers, simply drop me a note and we will be in touch right away to help you explore the possibilities.