December Home Absorption Rate Analysis
The Tallahassee housing market continues to cool, but some areas and some prices are doing better than others. I always recommend prospective home buyer and home sellers look at the current monthly inventory report in the sidebar of the Tallahassee Housing Report. Each one contains months of supply (the inverse of home absorption rate) for all four quadrants of Leon County, Florida.
In the real estate graph above, the red line is the number of listings on the market each month, the green line is the number of sales, while the blue bars measure months of supply (inventory of homes) in Tallahassee. Even though we are seeing the supply of homes for sale in Tallahassee continue to drop, slowing sales is actually moving at a faster rate, thus forcing an increase in the relative supply of homes.
Currently, there are 12.4 months of supply of homes for sale in Tallahassee, which is more than double the amount we would need for the market to be "normal" or balanced. The following real estate charts show supply and demand by area and price range, and how they changed from November to December (2010).
In this chart, we see supply levels way too high. One extreme is homes priced $250K to $300K in the Southwest portion of Leon County. There are 144 months of supply (12 years). This is the same as saying that we have all the $250K to $300K homes we need in the SW for the next 12 years, assuming no other homes hit the market and demand remains at its current rate.
The areas in the chart above show black if supply increased, and red if supply was reduced. Overall, there was little change from November to December. We must focus on increasing demand through population growth for this recovery to begin to develop.
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