Northwest Tallahassee Resurgence
Northwest Tallahassee is seeing a resurgence as we find in one of the measurements that we record each month to determine home sales patterns by quadrant in the Tallahassee real estate market. The Northeast section has been growing faster than the rest for several years, but this trend came to an abrupt halt last month.
Fueled by foreclosure sales, short sales, and rapidly falling prices, the Northwest quadrant of Tallahassee put an end to its falling share of the home sales last month.
In the graph below, the Northwest (red line) shows a steep rise, while the Northeast (blue line) shows a near-corresponding drop.
I believe this is due to the gross over-supply of homes that has been built on the west side of town, much of which are student rentals. The Northwest quadrant has over 14 months of supply of homes remaining (see page 8 of this newsletter), and will continue to face heavy pricing pressures as this glut is consumed.
The Southwest is facing a similar situation, where relative supply is near 20 months. But the Southwest has far fewer homes as it is the least active part of the Tallahassee housing market.
I would not expect too much construction in the Southwest over the next five years, so investors will be picking up some excellent purchases there as the values continue to decline to levels just too attractive to be ignored.
All of Tallahassee faces an over-supply scenario, but the west side is far more out of balance and will be hit hardest.