Reducing Home Permits Has Assisted Inventory Reduction
Every month I receive a report and a database file containing the sales information for Leon County homes, townhomes, and lots. I consider this day to be critical in the measurement and understanding of the activities and trends in the Tallahassee real estate market. Late last night, I received my update.
We have (and will continue) to track and record inventory movement on a daily basis at the Tallahassee Real Estate Web Site. The study of home inventory trends in Tallahassee reveals the direction of the housing market and that is why we update the information on our web site several times per week.
Tallahassee Home Inventory Continues To Drop
We continue to see the number of homes for sale in Tallahassee dropping, though the supply of homes is still way too high. Taking a quick look at our housing inventory trends graph we all three trends are still reducing:
While both the 30 and the 90 day trends demonstrate that we are reducing inventory by 5 homes a day, the 180 day trend is down to a 3 homes per day reduction. In simpler terms, this means that
- Tallahassee home inventory has been reduced by 5 homes on average, each day, for the past month (150 fewer homes for sale now than a month ago)
- Tallahassee home inventory has been reduced by 5 homes on average, each day, for the past 3 months (450 fewer homes for sale now than 3 months ago)
- Tallahassee home inventory has been reduced by 3 homes on average, each day, for the past 6 months (540 fewer homes for sale now than 6 months ago)
Fewer New Homes Being Built In Tallahassee
We track the number of new homes being permitted each month to keep an eye on housing consumption and the future availability of new construction homes in Tallahassee. Currently, we are seeing the lowest amount of new home permits in Tallahassee than we have every recorded over the past 12 years. I believe this is helping the market thin out the inventory of homes for sale.
Looking at the graph above, the green line represents the number of new home sale that have sold while the red line represents new home permits. It is important to not that this is a trend line, meaning each point on the graph represents information for the previous 12 months:
- On Average, 66 new homes were permitted each month over the past year
- On Average, 64 new homes were sold each month over the past year
Compare this trend with the peak of the market in January of 2006 (permits) and July of 2006 (sales), when
- On Average, 143 new homes were permitted each month over the past year
- On Average, 141 new homes were sold each month over the past year
Taking a look at these numbers, our peak to trough for new construction homes has moved
- On Average, new home permits are down 54%
- On Average, new home sales are down 55%
Take A Lesson From Professional Home Sellers
The builders in the Tallahassee real estate market have figured it out. Too many homes on the market means for too much competition and profits are scarce. Tallahassee home owners need to follow the example of our Tallahassee home builders. If you Do Not need to sell a Tallahassee home, do not put your home on the market. The market will recover quicker with a balance of supply and demand.
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If someone has a home they want to sell, would it be better to try to rent it right now, rather than sell it?
Hey Anne, you ask a great comment. Unfortunately, one answer does not apply across the board to all homes. Some factors involved include:
Why is the owner selling?
Is the house a good "rental" property?
Will the rents cover a good percent (or all) of the operational costs?
How long will it have to be rented before it can be sold?
What will occur to the value of the home once it is converted to a rental property?
So, this is to broad a question for a quick answer. Using general parameters, I would say that what anyone in the position should do is consult a great Realtor and find out:
1. Net from selling now.
2. Expected rental cash flows.
3. Expected future sales position.
Then, the owner makes the smartest decision based upon the factors that are most important to the owner.
I hope this is not too vague. If you want, just comment back with any more detail and we can continue on the discussion.
Thanks for the comment.
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