Are Large Homes For Sale Breaking The Law?
I never would have expected it to happen, but the large homes for sale in Tallahassee are breaking the law.
The law of supply and demand. So I'm conducting a reader poll to see what everybody thinks is going on.
What's Going On With Large Homes For Sale
As I was collecting information for our Weekly Special Real Estate Report, I discovered something that defies one of the four laws of supply and demand for the large homes for sale in Tallahassee. For the sake of review, these four laws state:
- If demand increases and supply remains unchanged, a shortage occurs, leading to a higher equilibrium price.
- If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower equilibrium price.
- If demand remains unchanged and supply increases, a surplus occurs, leading to a lower equilibrium price.
- If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher equilibrium price.
Law #2 describes the Tallahassee real estate market in general for the past several years until recently. This year, the increase in demand for homes near the median (in both size and value) has increased, moving the market towards equilibrium.
But large homes for sale still suffer from a glut of inventory, thus we would expect to see values decline (a lower equilibrium price). While this has been the case for homes greater than 4,000 square feet, the opposite is true for homes between 3,000 and 4,000 square feet.
The real estate graph below shows how only the largest of the large homes for sale have seen depreciation this year:
We are wondering why large homes for sale (in Tallahassee, any home over 3000 square feet is much larger than the average home), so why have they seen a rebound in 2013?
Could it be interest rates making the homes more affordable? That still doesn't address the fact that supply still far outweighs demand. And with interest rates on the rise, the number of people who can afford these large homes for sale is falling fast. So what do you think is going on?
Remember, your thoughts and opinions drive the content at the Tallahassee Real Estate Blog. Please share your thoughts on the inventory of large homes for sale in Tallahassee so we know where to go from here.