Take A Historic Look At Tallahassee Home Values
Recently, I was discussing Tallahassee home values with somebody relocating to our fine city.
They were curious about whether I thought the market was over (or under) valued, and what I thought about the prospect of buying into the Tallahassee real estate market today.
Fortunately, I happened to have the perfect graph on hand to examine the long-term changes for home values in Tallahassee.
Tallahassee Home Values
After doing an exhaustive study of all existing home sales recorded in Leon County, Florida and selecting homes that were recorded with information about their size (more than 97% of the properties), we were able to produce a long-term analysis of Tallahassee home values.
In the graph below, the average price per square foot of existing home sales each month are recorded as blue bars, measured on the left vertical axis. The one-year average value is shown as a blue line.
The green line shows a continuation of the appreciation rate established in the 1990s, and serves as a comparison measurement for future values. When the blue line moves above the green one, we find a market that is appreciating faster than "normal." When it falls below, the opposite is true.
Right now, the average home value is below the normal appreciation rate that we saw in the 1990s. This means that there are homes for sale in Tallahassee at prices below normal levels.
Note how home values in Tallahassee soared above this level during the peak of the housing market bubble, only to crash well below in more recent years.
The red line shows the annual appreciation rate since 1991. Think of it this way ...
If you purchased a home in 1991 and sold it at any point in the past, the red line shows what your annualized appreciation rate would have been. For example, if you purchased in '91 and sold in 2006, your annualized appreciation rate would have been 6.5%. If you purchased in '91 and sold today, your appreciation rate would be 3%.
Real Estate Appreciates
They say that the reason that you buy real estate is that it "always" appreciates. I think that will "always" be true, so long as we see continued growth in (inflation) minimum wage and all the other costs associated with building a home. As Tallahassee's population grows, new homes will be needed, and the cost of delivering them to the market will be higher than what it cost in the past.
There will be time when supply and demand balance gets out of whack, and real estate will depreciate (like we saw from 2006 through 2012). But over the long-haul, it has been a proven fact that values will rise.
I think the lessons of the recent past should discourage people from assuming that values always go up, but for people who plan on living in Tallahassee for the long haul, it makes good sense to own a home. I think we will see a more cautious buyer in the coming years, with people who are unsure of the future in Tallahassee choosing to rent instead of simply buying and assuming a sale with equity.
People who purchased their homes at the top of the market and still own their home will one-day have equity as values regain their upward momentum.
Planning A Move
If you are thinking about buying a home in Tallahassee and are unsure of your future, you have options. Our rental market is not nearly as organized as our for sale market, and their are certainly risks associated with renting a home in a market where many owners are still defaulting on their mortgages.
Planning a move should include consideration for both renting and buying. Speaking with a well-trained real estate agent can help you assess the risks associated with both renting and buying.
Right now, history tells us to expect a higher than "normal" appreciation rate, as values are still below where we would expect them to be based upon the trend we saw in the 1990s.
If you would like to know more about Tallahassee home values in your desired price range, just drop me a note and we can schedule a time to help you review your needs and wants in a Tallahassee home.