New Information On Tallahassee Home Prices
With all the major real estate reporting centers claiming that the Tallahassee real estate market is seeing appreciation, I felt it might be a good time to explain the difference between higher spending and appreciation.
As we look at this first graph, we can see that the average home price in Tallahassee appears to be higher (through February) than it has been in years past.
While this is good and accurate information, I suspect that many people are using this information to declare that home prices are rising in the Tallahassee real estate market. I think that lower mortgage interest rates in Tallahassee have allowed buyers to buy more home for their money, rather than pay more money for a home. In order to demonstrate this point, I downloaded all the Leon County residential sales from the Tallahassee Board of Realtors Multiple Listing Service (Tallahassee MLS) for the past twelve months. I then sorted them by price range. The following chart shows residential sales in Leon County compared to homes currently for sale in Leon County.
Note how each price range has four colored bars above it, and a yellow field behind them. I have "blown up" a section of the above graph to show what this information is telling us. In the picture below:
- Point #1. shows red arrows trending downwards. This is the past 12 months, 9 months, 6 months & 3 months sales for each price range. Note how the price per square foot for each price range is falling? I believe this is demonstrating depreciation in each price range.
- Point #2. shows us the yellow field is the current asking price at each price range (presented as price per square foot). Note that the price range of $125,000 - $150,000 has the yellow field closer to the tops of the vertical bars (the asking prices average 9% higher than the previous 3 months sales) as compared to the price range of $250,000 - $300,000 where the yellow field is much higher than the tops of the vertical bars (the asking prices average 20% higher than the previous three months sales).
Conclusion on Residential Home Prices In Tallahassee
There are many good buying opportunities in the Tallahassee real estate market. There are also a lot of homes that are over-priced and can be confusing to buyers. The key is to use the modern tools that are available to find the best buys in the Tallahassee real estate market. The graphs above were created using "averages," but averages are not what a buyer buys. Each home is priced specifically and it takes all the homes for sale in Tallahassee to create the averages. If you want to buy a home in Tallahassee, just look at the homes of the Sellers who are priced to sell, and your selection process will be much simpler and more enjoyable.
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Joe Manausa is a real estate investor and the Broker and Co-Owner of Joe Manausa Real Estate. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.
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Andrew, this is an outstanding question. I wrote a blog a few weeks back comparing price versus interest rates in terms of which factor is more important in your buying decision. I encourage you to read that as I think it will answer your question. Also, you never know when the bottom has been hit; don't let "averages" fool you. If the grossly overpriced lower their prices, but the "well priced" do not, averages will still be falling, even as values stay the same.
This is good stuff. However, if prices are dropping as your analysis shows, doesn't this mean that it would be best to wait to buy? If the trends continues, it looks like I should be able to pick up a house for about $10k less in 2009. Why buy now?
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