Relative Home Supply Growing In Tallahassee
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The Tallahassee MLS is an excellent source of information when you want to compare supply with demand. We can pull a lot of useful information out of the MLS when we compare active listings and past home sales, but one of the most important trends that I like to follow is the "Relative Supply" trend. We use this to measure housing consumption, or the rate at which homes are being purchased.
The relative supply is the number of homes available, measured in months of supply, when compared to the previous years rate of sales. While we know that the actual supply of homes for sale in Tallahassee has been dropping, we need to also keep our eye on the relative supply.
Relative Home Supply In Tallahassee Continues To Rise
The following graph depicts the current active residential listings (homes for sale) in red, each months sales of homes in green, and then the computed months of supply of homes in blue (total inventory based upon the current rate of home sales).
Looking at the red active listings line, we can see how the number of homes for sale fell off quite a bit from last year, but has since leveled off in 2009.
Unfortunately, the number of green home sales has stayed well below the normal rate, thus pushing the blue months of supply upwards of 15 months!
Simply put, at our current rate of sales, we have enough homes on the market currently to cover demand for the next one year and three months.
Home sellers need to understand housing consumption rates and relative home supply. So many people are putting their homes on the market at last year’s prices, only to see buyers not even take a look at them. If you really want to sell a home in Tallahassee, you have to understand what is going on in the market and what is going on in your specific price range.
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Discussion
Joe,
Great newsletter this month. Have a few questions, observations regarding short sale properties. First, I wonder of all the agents in the real estate community really know what a short sale is. Its almost used as a marketing ploy nowadays. Its like any owner selling their house for less than what they think it is worth, is a short sale. So, what does the law or ethical standards say the definition of a short sale is? Does advertising a short sale mean that the lender has agreed to accept less than the mortgage balance and the seller and Realtor have written confirmation of this? Or, is everyone just praying they will take a short sale. Does the lender typically cut the commission so everyone takes a haircut? Or does the seller have to pay the commission out of pocket?
Thanks Doug. I can't speak for everybody, but I don't see anybody using the short sale as a marketing ploy. A large percentage of homeowners are upside down in their homes these days.
The definition of a short sale that is most widely used is when a home is sold for less money than it takes to satisfy all existing liens against the home. While the homeowners is the approving authority on the contract, you will not get it to closing without all lienholders' approval.
As far as advertising, when somebody is using the term "short sale," they are in essence warning all buyers that any transaction will be subject to lender approval. All short sales are "unique" in that it really depends on the experience of the asset management people working on behalf of the lender. It is my experience that everybody is kind of waiting to see what will happen. We have quite a few submissions that we are waiting weeks to hear back from the lenders, even though we call daily. It is very frustrating, but necessary, in order to get the market back to balance.
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