Housing Starts Graph Beats AP To The Punch
Every month we look at the housing starts graph in the Tallahassee Real Estate Newsletter or on the Tallahassee Housing Reports web site, and thus we were not surprised when the news story hit the Associated Press wire stating:
PERMITS PLUMMET: Building permits, an indicator of future construction, fell 8.1 percent last month to the lowest level in more than 50 years. Permit requests for single-family homes, which represent nearly 80 percent of the market, saw the biggest decline. - The Associated Press
This is not really "news," rather it is a continuation of our market watch. We know that the supply of homes for sale in Tallahassee, and nation wide, is too high for the current demand. The over-building that occurred during the boom must be tempered with an equivalent period of "under-building" in order to restore balance in the supply and demand of real estate.
Our 20 year tracking of the one-year trend of single family detached home permits and sales shows that new construction in Tallahassee is at an all time low. If the national reporters would follow this same analysis with their data, they would be able to anticipate the market shift as supply and demand comes into balance. But we are far from there.
RECOVERY YEARS AWAY: Economists say it will be years before the pace of building returns to a more healthy level of 1.2 million units a year. - The Associated Press
Again, no real news flash here as well. If you follow our monthly housing inventory reports, you will know when the recovery is near.
Builders use this report to anticipate needs in the market, and right now there are 12 months of supply of homes for sale in Tallahassee! Builders will start to get active again when market equilibrium is reached (5 to 6 months of supply).
The good news is that we are currently in a consumption mode, as the real estate graph above shows more new homes are being sold than new home permits are being created. As long as this trend continues, we will see a faster recovery of the housing market in Tallahassee.