New Permits And New Home Sales March 16, 2010

New home permits and sales levels are at historic lows in Tallahassee. It is imperative that we monitor the production of new housing units, as the glut of homes needs to be consumed and new homes being built only lengthens the recovery time in the market and puts pressure on pricing.

I was recently sent a quote from Warren Buffett, who in his annual letter to shareholders addressed the national housing situation in one of his comments. Here is what the "Oracle of Omaha" had to see about consuming the glut of homes:

“There were three ways to cure this overhang: (1) blow up a lot of houses, a tactic similar to the destruction of autos that occurred with the “cash-for-clunkers” program; (2) speed up household formations by, say, encouraging teenagers to cohabitate, a program not likely to suffer from a lack of volunteers or; (3) reduce new housing starts to a number far below the rate of household formations.

Our country has wisely selected the third option, which means that within a year or so residential housing problems should largely be behind us, the exceptions being only high-value houses and those in certain localities where overbuilding was particularly egregious. Prices will remain far below “bubble” levels, of course, but for every seller (or lender) hurt by this there will be a buyer who benefits. Indeed, many families that couldn’t afford to buy an appropriate home a few years ago now find it well within their means because the bubble burst.”

Tallahassee New Home Permits And Sales Trends

This graph looks like it was prepared specifically for Mr. Buffett's comment. We are producing fewer new homes now than we have done in the past 20 years, allowing the market to consume the oversupply of homes that are on the market, as well as the ones in the shadow inventory. Hopefully our home builders can hang in there for another year as we look to put the glut behind us and begin moving forward again.

Tallahassee Real Estate Links

Do you want to know more about the Tallahassee real estate market? It is not as hard as you might think keeping up with the movements in the housing market, you just have to know where to look. The following are some of the best resources that you can find on Tallahassee real estate:

• Tallahassee Short Sale Listings: Tallahassee Short Sales
• Daily Real Estate Blog (A Technorati Top 100): Tallahassee Real Estate Blog
• Current Housing Reports: Housing Market Reports
• Map Based Property Search Tool: MLS Property Search
• Foreclosure Reports: Lis Pendens and Foreclosures
• List of Distressed Properties in the MLS: Distressed Properties
• REALTOR® news and updates: Successful REALTORS®