New On The Market Home Sellers Must Know Their Place
Home sellers who are new on the market should understand their place in the pecking order of all the homes for sale in Tallahassee.
More than 40% of the homes that were new on the market last year failed to sell, and I believe that many of these frustrated homeowners would have done things differently if they only had known how to do so.
So What's New On The Market
When we look at homes that are new on the market over the past thirty days, we see an expected progression from low priced new listings to the more expensive homes, but with one exception.
The graph above shows all homes new on the market in Tallahassee over the past thirty days (priced above $100,000). The orange arrow shows that there seems to be a large contingent of home sellers in the $500K to $1M price range, which I feel requires further analysis.
Comparing New On The Market With Recent Sales
When we compare the number of homes new on the market with sales over the past year, we can establish the relative supply of homes (months of supply measured against the current rate of home sales).
We can see (circled) that there are somewhere between 18 months of supply and 75 months of supply of homes for sale over $500K in Tallahassee! At 75 months of supply, the data is telling us that if nobody lists a home in this price range between now and January of 2018, there are enough homes currently on the market to satisfy demand at the current rate of sales. Ouch!
Ignore Reports Of Falling Supply
Of course, most real estate reports are telling people that supply is falling, but what they are omitting is that most of the falling supply is occurring at the lower price points. The table below shows relative housing supply change in Tallahassee over the past twelve months.
Overall, the Tallahassee housing market has seen relative supply drop by 1.5 months of supply, but homes priced above $500K increased from 2 to 32 months of supply! That's right, it is getting more competitive, not less competitive.
The split market is starting to form in Tallahassee (like we've reported in other real estate markets), and we are going to see significant real estate depreciation in the upper end continue to filter down and become the new on the market homes in the middle price ranges.
So many of these homes were built during the boom of the housing market, when ill-advised loan products created a large demand for more expensive homes. What is going to fill this demand now and in the future now that these loan programs no longer exist?
And when interest rates begin to head higher, it is only going to compound the problems for homes in the higher price ranges. The demand for homes above $500K is going to be depressed for a long time (compared to the 2002 to 2007 markets), and it is likely that we will need more than ten more years to hit market equilibrium at these prices.
If you own a home that fits into this price range and you are thinking about selling, drop me a note and we can schedule a time to discuss your specific situation. Whether or not you choose to be a new on the market home, it will be well worth your time to understand all of your real options.