Housing Market Imbalance Continues In North Central Florida
The Tallahassee real estate market report has been published at our Market Reports page and it shows a rise in the relative supply of homes for sale in Tallahassee. Today's blog post will expand the report to include all of the counties covered by the Tallahassee MLS, including Leon County, Wakulla County, Gadsden County, Jefferson County and Franklin County.
Pending Home Sales
The first place we'll start is the trend of pending home sales, which is the monthly average number of new contracts being entered into the Tallahassee MLS. By tracking the trend of new contracts, we will get a feel for the activity in the housing market in North Central Florida.
Based upon the real estate graph above, we have seen new contracts in the Tallahassee MLS show three months of consecutive declines when observing year-over-year pending home sales. By focusing on year-over-year, we take seasonality out of the market (some months are stronger than others every year, so by removing seasonality, we get a truer picture of the market's movements).
Housing Supply And Demand
The next graph shows the Greater Tallahassee Area (North Central Florida) real estate supply and demand, which is simply the plot of the trend of homes for sale against the trend of closed home sales. By comparing the two, we are able to produce the relative supply of homes (inventory of homes for sale in North Central Florida at the current rate of demand).
This graph shows that even though the real supply of homes is falling (red line), the relative supply of homes is not falling (purple line) because the trend of annual home sales continues to fall. This falling demand is the single greatest problem in the housing market, as many of our "would be" homebuyers are currently stuck in a home that has no equity (or negative equity).
Real Estate Supply And Demand Imbalance
The final graph that we'll include today shows the serious imbalance between sales and listings in the Tallahassee MLS. Note how great the ratio was back in 2003, and how now the complete inverse has occurred.
There are far more sellers than buyers in our current real estate market, and our graphs today show that current trends are not positive for the hopes of a housing market recovery. It will take time to cure this ailing housing market, and we must do everything possible to encourage growth and jobs in the North Central Florida area. The more people who move here and help to consume the glut of homes, the faster that we will see stability return to the Tallahassee real estate market.
Note for home sellers: I have been saying this for years, if you need to sell a home in Tallahassee, sell it now, and sell it fast. Values will continue to decline for the next several years, and waiting will only multiply your losses. Most lenders are being very lenient on short sales right now, but this too will come to and end when the banks consider it time to move on.