30 Reasons Why We'll See Improvement In The Tallahassee Real Estate Market in 2009
The data for December has just arrived this morning, so I will be assembling all of the Tallahassee real estate market reports for the end of 2008. It is a lot of work, but it helps me to understand exactly what is going on in our housing market and the analysis provides us some insight as to what to expect from the market in 2009.
December was down again, compared to December of 2007, but that was already expected as we have explained in previous blog posts on the Tallahassee Real Estate Blog. So, if December was down (again), what are the reasons that lead us to believe we'll see improvement in the Tallahassee real estate market in 2009?
30 Reasons For Improvement In Tallahassee Real Estate
While I'm not expecting 2009 to be a particularly good year in the Tallahassee housing market (I predict it will be similar to last year), I do expect that we will see some year-over-year improvements this year. Why? Well, take a look at this!
The real estate graph above shows 30 (Thirty!) consecutive months of worsening performance in Tallahassee home sales. I am willing to bet we cannot possibly go another year this way. Even if we have a relatively poor year, some months this year will produce more unit sales than the same month of 2008! I guarantee it or your money back for this blog!
So, what you think? Which month will be the first to break the trend?
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Discussion
I'm really enjoying your blogs! Thanks for the real estate insights. We bought our Indianhead Acres home Dec.'06. How much value have homes in our neighborhood lost since that time? If I can find this information in an earlier blog, please direct me to a link.
Hey Karen, thanks for commenting. You can read about the latest update on all Tallahassee subdivisions at http://www.manausa.com/09/tallahassee-neighborhood-study/. You will find this table near the beginning of the article, and it shows Indian Head acres down 16.5% on average price and 40.6% on unit sales.
I feel duped! Very creative title.
Yes, I agree that 2009 will see some improvement though I'm not certain that the average homeowner will notice the changes. My position continues to be that the discretionary buyers in the market have been disciplined for long enough, and some will choose to move no matter the cost (or gain from a long-term perspective).
Furthermore, I think that real estate agents have to be more effective at dispelling myths like, "My house will sell for more money in the summer" or "I need to get back the cost of that A/C I put in last summer".
Unfortunately, there still seems to be a lot of bad information in the market, and it will be difficult to make a substantial shift without an increase in knowledge. Thanks for your efforts to educate us on real estate as a commodity!
Duped ... hmmmm.
Thanks Summer. I agree that professionals in the rest estate industry have to diligently work to dispel old myths that are based upon pre-computer era history. I also agree that we'll see some of the "back log" of buyers start to come to the front now, especially with some of the great new first-time home buyer opportunities that have been created.
Okay....
Here's 30 reasons why I do NOT feel that 2009 will see any improvement in the Tallahassee housing market:
1. Florida's unemployment rate is already at an 18 year high with absolutely no indication of the rate improving in the near future. People don't buy homes if they're unemployed or worried about becoming unemployed.
2. State budget cuts will certainly increase Tallahassee umemployment.
3. FSU and FAMU budget cuts won't help either.
4. Tough mortgage underwriting standards have returned. This will lead to the
5. It will be extremely difficult to get a loan if your FICO does not exceed 700.
6. It will be extremely difficult to get a loan for more 2.5 times annual income.
7. It will be extremely difficult to get a loan if your debt-to-income ratios exceed standard 28/36 rules.
8. It will be extremely difficult to get a loan if you don't have 10% or more down.
9. It will be extremely difficult to get a loan if you don't have VERIFIABLE income.
10. It will be extremely difficult to get a loan if you have any foreclosure, bankruptcy, or significant judgement on your credit report even if your FICO is okay.
11. We only scratched the surface on the foreclosure front -- most subprime foreclosures still haven't hit the market as REOs
12. The Alt-A and Option ARMs still have reset. They don't start resetting until mid-2009. They'll rival the subprime mess.
13. The Fed can't lower interest rates any more.
14. Deflation.
15. The Federal Government is running out of bailout money.
16. State government has been inept at fixing the insurance problems in Florida.
17. Save Our Homes remains descrimatory against new buyers.
18. SOH Portability is a failure and has done little to stimulate demand.
19. Mortgage fraud remains a problem.
20. In most cases, it's still far cheaper to rent than it is to buy the equivalent home.
21. Overbuilding even in Tallahassee.
22. Population growth is anemic in Tallahassee (and may get worse with state budget cuts).
23. It's still cheaper to buy in neighboring states.
24. "Back log" of buyers following the loosest credit standards in American history? I think not. It's more like a "back log" of sellers.
25. Capituation among sellers still hasn't happened -- that's why we see so many over-priced homes that don't even approach market value in Tallahassee. Once capituation happens, prices will really adjust.
26. Silly efforts by the Feds and the state are simply prolonging our road to the eventual bottom.
27. HGTV-type flipper shows still portray housing as a money-making investment rather than a place to live.
28. The stock market crash continues to have a negative impact on consumers.
29. Dishonest, unprofessional Realtors continue to hurt the industry. If they were all like you Joe, this wouldn't be an issue. Unfortunately, they aren't.
and...
30. Pessimistic scaremongers like me.
Thanks Steve, that really is 30 reasons! I can't say that you don't make great points, but I think it is highly improbable that we take our string of 30 consecutive down months and extend it to 42. Thanks for commenting, we'll just have to wait and see. Keep your eye out for the March numbers....
Steve has a few good points (especially about HGTV), but they seem to be aimed at the credit and cash poor. Do they make up the majority of home buyers?
What if you are cash poor right now, but have great credit? It still seems to be a good time to buy (if you plan on staying for a few years) with such low interest rates, and low home prices (assuming you can acquire financing).
From my calculations it appears that if you buy a lower end home (under $150k) right now you could rent it out for profit within year one. To me that signals it's a good time to buy.
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