Use Housing Supply And Demand To Determine The Asking Price Of A Home

Housing Supply And Demand In Tallahassee Florida Real Estate MarketIf you want to sell a home in Tallahassee (or anywhere else for that matter), then you better ensure that you have a handle on housing supply and demand.

The real estate market is no different from any other market, and the housing supply and demand situation is going to determine the direction and slope of value change.

In the simplest sense, if we don't have enough places to live, then people are going to be willing to pay more (whether renting or buying) to ensure they have adequate housing. On the hand, if we have too many homes, then highly motivated property owners will continue to undercut the current market to ensure that their home sells.

When most people decide to hire a realtor to sell a home,  they often times have not really thought the situation through and have not made the connection to the fact that their home is a commodity which must compete in a market (where values are dictated by housing supply and demand).

Housing Supply And Demand In Tallahassee

So how does a prospective home seller determine housing supply and demand in Tallahassee, and more specifically, the exact supply and demand for his/her specific home?

Well, since you are reading this, then you know the Tallahassee Real Estate Blog provides you with monthly reports on housing supply and demand for Tallahassee. But if you are in another market area, you can drop me a note and I will refer you to the best real estate agent for you.

So here are three charts that I recommend that you study before you decide to sell your home. These are current for February 2012, but we update them on our site (click the "Market Report" tab on the Tallahassee Real Estate Website) every month.

Housing Supply And Demand Tallahassee Florida

The real estate chart above shows the current supply of homes in each area and price range in Tallahassee (measured in months of supply). The market is considered "normal" when supply falls between 5 and 6 months, so all of our areas and price ranges have too much supply.

Housing Supply And Demand Chart

The charts above show the number of homes for sale in Tallahassee on the left, and the number of homes that sold over the past twelve months. These are very useful housing supply and demand charts that will allow Tallahassee homeowners understand the depth of the competition as well as the demand for homes similar to theirs.

Real Estate Supply And Demand Graph

This final chart shows how many homes are selling each month. Of all the housing supply and demand numbers, I would think this is the easiest for homeowners to understand and embrace.

If you look at the highlighted line in the chart above, it shows how many $250,000 to $300,000 homes sold last year, in each quadrant of the Tallahassee real estate market.

If you have a home in NW Tallahassee, priced in this range, you can see that last year the average was just 1 sale per month. With 23 currently on the market, can you see how your home will most likely not sell if it isn't the best value of all the homes for which you compete?

Using Housing Supply And Demand

A great real estate agent will show you these specific numbers for your home, in your neighborhood, and help you select the best asking price for your home. By knowing, understanding, and using information about housing supply and demand, you can get the most money for your home, whenever you decide to sell it.


#1 By Francis at 7/11/2017 3:46 AM

I love the blog keep up the good work. I am a prospective buyer in the area and I have grown increasingly frustrated by unrealistic sellers. I have done a fair amount of research on the market and it seems like prices are still high in the area. There is still alot of uncertainty around housing due to high unemployment, a backlog of foreclosures and tight credit conditions and many buyers (me included) don't want to overpay. Rates are at historically low levels and when they start to rise, more expensive homes will be that much harder to sell in the future since people these days buy based on mortgage payments and not house price.

How do you advise buyers to approach a prospective seller with an offer that is 20% below asking price without offending, even if it is a fair price based on the market? I find that many real estate agents are hesitant to do this, regardless of their thoughts on the market, because they are incentivized to get the highest price possible, not to necessarily get the buyer the best deal. Do you have any thoughts about where current price levels should be (example: pre-bubble 2003 valuations)?

#2 By Joe Manausa, MBA at 7/11/2017 3:46 AM

Thanks Francis. Your comment/questions are perfect for writing about, so please check out my home buying advice post!

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