Real Estate Inventory Falls Again In October
Once again, the supply of homes for sale in Tallahassee has fallen, even as home sales remain at historical lows. We published the November Housing Report this morning and it provides clear market feedback that is more a sign of pent-up supply than an actual report of falling real estate inventory.
In order to see a real reduction in the real estate inventory in Tallahassee, we need to see monthly sales begin to head back to historical norms. We know that there was more than a year's supply of homes in the shadow inventory last time we made an approximation, and low sales levels mean that number is not dropping very fast, if at all.
We have been advising homeowners who want to sell their home to make a choice between selling right away, or waiting 5 or more years for the market to return to levels exceeding today's values. This advice is not changing, as home values are still declining and people who sell now will most likely yield more than those who wait until next year to sell a home.
Tallahassee Real Estate Inventory
The real estate inventory graph below shows the total supply of single family homes, condominium units, and townhouses (red boxes), monthly sales (green triangles), and the corresponding relative supply of homes for sale in Tallahassee (blue columns) going back to the beginning of 2008.
The good news from this graph is that relative supply is at its lowest levels since before August 2008, but the bad news is that the relative supply of homes for sale in Tallahassee is still nearly double the level required to reach market equilibrium. Had we not been monitoring the homes that failed to sell and the shadow inventory of homes, we could mistakenly believe that a quick increase in demand would restore the market immediately.
The reality however, suggests that as soon as demand begins to grow in the market, the supply side will start rushing back into the market. This is important to understand if you are a homeowner hoping to wait it out just a little while longer, because there are too many prospective home sellers in this very same situation. We will continue to see competition for limited buyers and thus, falling home prices. If you know you need to sell a home, sell it now, sell it fast, and get top dollar before the market continues down to lower home values.