New Construction Slowing Again In Tallahassee
New home construction in Tallahassee continues to see falling numbers, as single family home permits and sales have posted yet another new 20-year low.
New construction has been declining faster than existing home sales, as we can see in the home sales graph.
In the graph above, the red bars show the number of new home sales each year, while the green bars measure the number of existing home sales each year. The resulting red line measures the percentage of new home sales versus the total.
Since 1991, new home sales have on average, represented about 22% of the home sales in our market area. Thus far in 2011, new home sales have only accounted for 11% of all home sales, which is a clear sign of low demand and a recognition of the glut of supply of homes already on the market.
Too often, we read reports published by the REALTOR association and the Home Builder association that talk about housing starts and why they are expected to rise, but it is my belief that we only need to pay attention to local supply and demand relationships to know when new construction will be needed again in Tallahassee.
With the log jam of home sellers who have recently tried (and failed) to sell their homes, there will still be plenty of “pent up supply” once demand starts to creep back into the market. This means that builders must expect the wait to take several more years.