Tallahassee Housing Inventory Update

Today's blog is going to be an update on the inventory of homes in the Tallahassee real estate market. I want to remind the readers that this information can be found, updated twice per week,  on our Tallahassee Real Estate Web site at //market.php.

The key to figuring out the market is understanding the cycles that we must endure. From the graphic below, we can see that we spent the past two years stuck between Point A and Point B. Prices have risen and we were seeing our inventory grow. This was in part due to over-building, but primarily due to the slowing actions of the Buyers. Buyers no longer saw great value in the prices of Tallahassee homes.Tallahassee Real Estate Market Cycles

The reason that we track inventory movement on the Market Bulletin is so that we can get an early warning for any shifts in the cycle. We began to see prices dropping about four months ago, letting us now that we had shifted between Points B. and C.

This shift can be very subtle and it typically cannot be identified without tracking a one-year-inventory-trend of homes in the Tallahassee real estate market. Seasonality in the real estate market causes inventory adjustments year-long, so it takes a one-year trend to truly identify these market shifts.

The next key that we are looking for is inventory falling, as we see in the graphic between Points C. and D. Again, it takes a one-year trend to confirm that inventory is definitely falling, but some of the market graphs below are showing signs that we have moved to this phase of the market cycle.

Tallahassee Real Estate Market 30-Day Inventory Trend

Tallahassee Home Inventory 30 Day Trend

This first chart is the shortest "short-term" trend chart that we maintain. The implications of what is demonstrated are fantastic.... inventory levels in Tallahassee appear to be dropping. But remember, this is just a short-term trend and we could be seeing the results of seasonality.

Tallahassee Housing Inventory Levels 90-Day Trend

Tallahassee Real Estate Market Cycles

Even more exciting, we find that the 90-day trend chart supports the 30-day trend. We are seeing inventories coming down over the past quarter of the year. If this trend continues, we will see if finally impact the 1/2 year trend below.

Tallahassee Homes - 180 Day Inventory Trend

90 Day Trend of Tallahassee Home Inventory

Unfortunately, our 6-month trend shows that our inventory is still increasing. Only time will tell if the short-term movements will stick around long enough to affect the long-term trend.

Inventory Trends In The Tallahassee Real Estate Market

Inventory Trends In Tallahassee Real Estate

This chart summarizes the three previous charts. Once we have been tracking inventory levels for a year, this chart will speak volumes on the condition and future of inventory movement in the Tallahassee real estate market.


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Joe Manausa is a real estate investor and the Broker and Co-Owner of Joe Manausa Real Estate. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.

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Discussion

#1 By Steve at 7/11/2017 3:44 AM

Joe,

I think you're being somewhat simplistic in you analysis on inventory. Rather than saying the direction of inventory growth rates affects prices, I think it would be more accurate to say that overall inventory levels affect prices. In other words, when we have high inventory levels, prices will fall (regardless of the direction of the growth rate). Conversly, prices will increase when inventory levels are low, even if inventories are increasing.

I think this is hard to show in a smaller market like Tallahassee. It's much easier to show in a large market like South Florida, which I happen to follow closely as well.

Check out this data from South Florida: http://www.housingtracker.net/askingprices/Florida/Miami-FortLauderdale-MiamiBeach/

As this shows, inventory in the Miami MSA peaked at 118,591 units in February 2008. At that time, the median listing price was $299,000. Since then, inventory levels have dropped to 114,375 (down 3.5%). However, median listing prices have dropped to $269,000 (down over 10%). Even in the face of dropping inventory, price drops are actually accelerating there.

Why? Because the inventory is so overwhelming in South Florida that they would probably experience continued price drops even if inventories dropped another 50%.

The good news is that Tallahassee is different. We don't have 36 months of inventory like South Florida, which means that inventory reductions will affect us more than them.

Regardless of all this, your data is good news that should provide us with some hope. However, it shouldn't be viewed as some panacea for our housing prices.

I fear that some sellers who are still holding out for 2006 prices will read this post and decide to maintain their unrealistic asking prices. Those sellers will really shoot themselves in the foot, because I don't think we're going to see 2006 price again at least 5 years (probably longer).

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