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Relative Home Supply In Tallahassee February 26, 2010

If you want to know the beginning of the next phase of the market turn, just keep an eye on relative home supply in Tallahassee (the blue bars in the graph below). Of course, you can always track housing supply levels at The Market Bulletin.

The next phase you say….? Absolutely. I believe that the transition from a buyers’ market to a sellers’ market will follow this pattern:

  1. Real Home Supply changes from growth to reduction.
  2. Home Values Fall At Accelerating Rate
  3. Year over year sales increase?
  4. Relative Home Supply levels reach 6 months of supply (market equilibrium).
  5. Home Values Stop Falling and Start Rising.

Glut Of Homes In Tallahassee

When we look at the supply and demand of homes in Tallahassee, it becomes readily apparent that the supply side is awash with too much inventory. In the graph below, we see the real supply of homes rose in January for the first time in 8 months (represented by the red line with red boxes), sales dipped down (green line with triangles), and thus relative home supply (the blue vertical bars) rose.

Real Estate Supply and Demand Graph

Sales Must Speed Up

Much of our data indicates that home sales are finally starting to increase, with 3 out of the past 4 months showing gains. It is going to take a return to “normal” sales rates for our market to expel the current glut of homes as well as the mounting supply of homes that exist in the Shadow Inventory.

The good news in all of this is that the current real supply of homes, while at glut levels for now, is at a historically  "normal" level. The real problem is that the demand side is just over 1/2 of the level that we have seen over the past 15 years. As the economy starts to recover, it is realistic to expect people to start moving around again, and the glut of homes will be consumed.

Great Tallahassee Real Estate Resources

Do you want to know more about the Tallahassee real estate market? The following are some of the best resources that you can find on Tallahassee real estate:

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