Housing Market Bottom Reached In Tallahassee
Oh how I've longed to write this article. We have been tracking the daily movements in the Tallahassee real estate market for well over 2 years now, and reporting our findings at The Market Bulletin twice per week since March of 2008. Early on, we discovered that we could track the trend of daily buyer activity (365 days worth of homes sold in Tallahassee) in order to be able to see when the direction of the market changed.
Tallahassee Sees Number Of Home Sales Rising
The following real estate graph is the unofficial tracking of daily buyer activity in Tallahassee. It is created using information from the Tallahassee Board of REALTORS® Multiple Listing Service (Tallahassee MLS) and looks at all the non-duplicate sales over the past 365 days, and recorded each day.
The "official" report that we will use to actually "call" the bottom of the housing market in Tallahassee will come out in another ten days. While the information above is timely and accurate, it only measures the home sales in Tallahassee that were recorded in the Tallahassee MLS, while our much more comprehensive report will include all sales in the Tallahassee real estate market.
You can monitor market activity at any time by visiting The Market Bulletin. I keep this site as a tab on my short-cuts bar in my web browser, because it is the most timely information that can be viewed on housing in Tallahassee.
Is Housing Market Bottom Call Premature?
It is obviously premature to call the bottom of the market, as we only have a 10 day up-trend. If this ends up being the true real estate market bottom in Tallahassee, you can record August 23rd, 2009 as the day the market turned! I really suspect that we are closing in on the bottom if we have not hit it already. My earlier predictions were for this to occur in November, but I'll certainly take an earlier result if we can find it.
Readers need to also remember that should this actually be accurate, we still have a long way to go. This doesn't mean that the Tallahassee housing market is back to normal or even that it is fixed, it only means that the number of home sales in Tallahassee is no longer declining.
Again, if this were to be accurate, we can still expect declining home prices as the glut of homes for sale still needs to be reduced significantly. The next part of the cycle requires the market to seek equilibrium in the supply and demand dynamic and that means inventories must be reduced.
Tallahassee Real Estate Blog Readers Call Market Bottom
I'm curious what others think about these results. Do you think it is a false bottom and we are going to see more declines? Do you think this is it, nothing but better times ahead? I would love to see some discussion here as it might give us a healthy glimpse at "consumer confidence," even if it is only anecdotal to our blog community.
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Joe Manausa is a real estate blogger, a real estate investor and the Broker and Co-Owner of Joe Manausa Real Estate. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.
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Discussion
Here's the problem with your analysis: While in theory, we may have hit a bottom in terms of sales volume, we're nowhere near the bottom in terms of price. And the latter is a more important metric to the consumer. Sales volume may be extremely interesting to Realtors. However, it's of very little relevance to someone either buying or selling a home.
In my opinion, swe're nowhere near the bottom in terms of prices. Unfortunately, there is still a massive shadow inventory of REOs and eventual REOs that will flood the market in coming years. As I've written on your blog before, lenders are not taking actions on current foreclosures. I know of dozens of Florida homewoners who have not paid their mortgage in more the 12 months and STILL haven't received a Lis Pendens. I also have seen public records where banks have foreclosed on properties as much as six months ago and the home STILL hasn't been listed on the MLS.
Eventually, lenders will have to take action on these homes. They will have to start listing them. They will have to start foreclosing on borrowers who aren't paying their mortgage. When this happens, the coming flood of foreclosures will flood the market.
What will happen when this finally starts to happen? Because these homes will be offered at huge discounts, you sales chart will take a turn. Sales volume will shoot up significantly. Realtors, especially those who specialize in REOs, do really well.
On the other hand, homeowners who are trying to sell will continue to see large price drops. Those considering buying need to consider when the eventual price bottom will hit (it's still problaby 2 years away).
Hey Steve, I agree with you. As a matter of fact, you can read quite a bit about me saying this in the blog and the Tallahassee Real Estate Newsletter for quite some time now. As a quick summary, I continually have (and will) stated that the market turn will occur in five stages:
I'm calling market bottom (I predicted between Aug and End of Nov) hopefully has occurred roughly 10 days ago. The increased sales represents the third of the five stages. The fourth stage shows continued declining prices (now at the fastest rate that we have seen) until market equilibrium is reached.
Thanks for the great comment. You are spot-on in terms of foreclosures not having had much effect on the market thus far, and future dominance of the market. Lenders are still sitting on their thumbs with delinquent borrowers, so this part of the market has just been simmering.
I do disagree with you on the "REALTORS" points. The fact is that REALTORs come and REALTORs go, but those of us in the business who are full-time professionals (only about 5% of the industry) stay busy in all cycles. REOs are just one aspect of the business, which historically is a niche, but currently is a large volume source. This only represents a shift in focus for us full-timers, not an increase in business volume.
Thanks again for commenting and I hope to see you here more often. Great input is always wanted!
Joe
A great discussion with interesting topic. I like it.
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