Newest Tallahassee Home Listings Smaller And Pricier
There were fewer new Tallahassee home listings in September compared to September of last year, and they are smaller yet the sellers are seeking higher values.
For the purpose of this report, I have pulled data from the Tallahassee MLS, and constrained it to homes priced $100,000 and higher in order to focus on the bulk of homes that fall outside of the Tallahassee real estate investor market. Thus, all medians are skewed but better reflect what owner-occupants are facing in today's real estate market.
The conclusion of this report flies in the face of what you might believe about real estate appreciation and why many housing reports are simply feeding you bogus conclusions.
The four real estate graphs included in this report have very similar structures. Each shows two important housing statistics for homes priced above $100,000 listed each month, and each statistic is also shown as a one-year trend (average over the past year) as a line with colors corresponding to the measured statistic.
Median Home Size
The median size of homes entering the market over the past year has been shrinking.
In the graph above, we see that the number of homes entering the market has been on the rise, while the size of these homes is getting smaller (black line). For September, there were 9% fewer homes listed for sale, and they were 6% smaller (1,756 square feet versus 1,875 square feet last September).
Median Asking ValueSellers want more for their homes. As more homes are streaming into the market, the median asking price per square foot is on the rise.
The median home priced above $100,000 and listed for sale in September had an asking value of $118 per square foot, which is 2% higher than the $115 per square foot being asked one year ago in September 2013.
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Median Asking Price
The median asking price for new listings in Tallahassee (priced above $100,000) has not changed much, though the $200,000 median price recorded in September of 2014 was 7% lower than the $214,000 recorded in September 2013.Looking at the red line in the graph above, I do not believe the reduction in median home prices reflects anything more than a bump in the data as the line is relatively flat.
Asking Price Versus Asking Value
Putting all the information together, we find a market that is trying to recover. The number of homes entering the market "for sale" is on the rise, and sellers are seeking more money (average values) for their homes.
But there is a conclusion here that might be easy to overlook.
Why Home Sellers Are Asking For MorePrices are not really changing, yet values are on the rise (compare the rising orange line in the graph above with the relatively flat blue line). This is supported by the decline in median home size shown in the first graph of this report. So with smaller homes selling for the same price as the larger homes in the recent past were selling, one has to wonder what is going on.
I think it is an indication that home sellers think buyers are willing to pay more for homes, and currently with near-historic-low interest rates, they are indeed willing to spend the money on homes. But as interest rates have creeped up this year, spending has remained stable (thus the median price remaining the same over the past year), but sellers have not noticed.
New sellers who have been waiting for rising home values are entering the market with the hopes of appreciation and higher home values.
But buyers are only spending the same $200,000 as they were last year, and it is getting them a smaller home. They are comfortable spending $200,000, because low mortgage interest rates are keeping their monthly payment in line with where buyers want it to be. But what will happen to the median price and value when mortgage interest rates rise?
This report is a good example of why we do not directly correlate the movement of median or average home sale prices with real estate appreciation, as prices merely indicate what buyers are spending, not what they are buying. Our report clearly shows that sellers think buyers are willing to spend the same today as they were a year ago, while sellers plan to give them a 9% smaller home for the money.
Of course, this report shows the "ask" side of the market, next week's update on September home sales will show us the "bid" side of the market and how all of these new MLS listings have performed.
Do you want to know how to take this level of market analysis and use it to your advantage when buying or selling a home in Tallahassee? Just drop me a note and we can schedule a time to demonstrate how market savvy puts money in your pocket!