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Southwood Homes Supply And Demand Concerns

Existing Home Sales In Southwood Tallahassee FloridaI received a comment from reader "GF" yesterday who was encouraged about some signs of recovery in new home sales. I thought his comment was very revealing in regards to the "big picture" on housing supply and demand, and that we could all learn from his question. GF wrote:

It is encouraging to see some building activity in places like Southwood,  but that's the result of the  Homebuyer Tax Credit. Now what?  The question is, how bad will it get before it starts getting better?

In order to answer this question, the very first thing I did was look at the most recent report on supply and demand in the Tallahassee housing market. Specifically, I focused on the Southeast side of town, where Southwood is located to see if there was any sign that we "needed" more homes built.

You see, with over 12 months of supply, we have a glut of homes on the market in Tallahassee. Additionally, our shadow inventory has been calculated at a size that is even larger than our current inventory, so my gut instinct is to say that we didn't really "need" those homes.

Looking at the Southeast Tallahassee homes supply and demand table above, point "A" shows a very low supply of new construction homes available, while point "B" shows a high level of supply of existing homes for sale in Southwood. What I think this is telling us is that buyers are liking low new construction prices that are more attractive than resale (existing) prices.

Current homeowners are being priced out of the market by new home sales. By my rough count, there were 30 new home sales in Southwood from March through June, which is roughly 1/2 of the arms length home sales in Southwood.

While it would be easy to point fingers at the home builder and say that it is hurting the market, the fact is that by holding on to inflated values, Southwood homeowners have created a niche in the market where the current builder can supply new homes cheaper than than they will sell theirs. This is adding to the supply and ultimately will make for an even tougher landing for Southwood homeowners.

All of Tallahassee will continue to languish in this corrective market until population growth consumes the existing supply of homes as well as those in the shadow inventory. Any new homes added to the market will only delay the full recovery, and will also create more competition among current homeowners who have been struggling with declining prices for more than 3 years.

Recent New Home Sales In Southwood

Southwood Address Sales Price Sale Date
2420 RAIN LILY WAY $217,000 3/30/2010
4280 FOUR OAKS BLVD $210,000 3/30/2010
4292 FOUR OAKS BLVD $209,600 4/9/2010
2408 RAIN LILY WAY $230,800 4/20/2010
4300 FOUR OAKS BLVD $154,900 5/11/2010
3100 MIST FLOWER RD $344,800 5/17/2010
4284 FOUR OAKS BLVD $151,600 5/19/2010
2404 RAIN LILY WAY $206,000 5/20/2010
4312 FOUR OAKS BLVD $150,000 5/20/2010
4296 FOUR OAKS BLVD $190,000 5/21/2010
GROVE PARK DR $495,000 5/24/2010
2440 RAIN LILY WAY $194,200 5/27/2010
4268 FOUR OAKS BLVD $145,000 5/27/2010
4316 FOUR OAKS BLVD $190,000 5/27/2010
2436 RAIN LILY WAY $204,400 6/3/2010
2432 RAIN LILY WAY $194,000 6/9/2010
4288 FOUR OAKS BLVD $150,000 6/10/2010
3068 INDIAN GRASS LN $265,400 6/15/2010
3950 SHUMARD OAK BLVD $196,800 6/15/2010
3728 RIVERTON TRL $222,700 6/16/2010
3942 SHUMARD OAK BLVD $154,100 6/17/2010
3946 SHUMARD OAK BLVD $147,500 6/17/2010
3079 BENT GRASS LN $258,000 6/18/2010
3938 SHUMARD OAK BLVD $191,600 6/18/2010
3150 CONE FLOWER DR $336,900 6/22/2010
3922 SHUMARD OAK BLVD $190,400 6/23/2010
3930 SHUMARD OAK BLVD $145,000 6/25/2010
3926 SHUMARD OAK BLVD $150,000 6/28/2010
3716 RIVERTON TRL $207,200 6/29/2010
3934 SHUMARD OAK BLVD $191,300 6/29/2010

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