Tallahassee Neighborhoods With The Highest Appreciation Rates

I was being interviewed by TaMaryn Waters at the Tallahassee Democrat the other day when the topic of real estate appreciation came up.

I mentioned to her that there were several neighborhoods on pace to appeciate at more than 10% this year, due to the high demand for homes combined with historic low inventories.

Due to her surprise, I realized this would make for a great report, so I have included all neighborhoods in Tallahassee that have had ten home sales or more thus far in 2018 which are on track to post (or long surpassed) appreciation rates above 10%.

Here is a list of homes for sale in these neighborhoods, followed by a graph and report of the top performers.

Homes For Sale In High Appreciating Neighborhoods

Real Estate Appreciation 101

When you combine scarcity with high demand, you get appreciation. This is true in any market, not just real estate.

Currently, the supply of homes for sale for more than 75% of our entire market area and price ranges falls too short to meet the current demand by prospective buyers. In fact, the inventory is so low that we're seeing it impact the market by slowing down the recovery.

What Tallahassee needs is for more residential units to be built in or near the highest demand areas and price ranges. Specifically, we need more homes priced below $300,000, so consider this a call to all builders and developers to put together plans to bring attached and mutlifamily housing to our market, it will get consumed!

High Appreciating, High Selling Neighborhoods

For the purpose of this report, I have only included neighborhoods that have posted at least ten home sales thus far in 2018, as this is likely enough data to confirm appreciation rate growth.

The graph above shows appreciation rates (red line, recorded on the right vertical axis) and the number of homes sold in 2018 (blue bars, recorded on the left vertical axis).

Lafayette Oaks is leading the pack with an average growth rate of 23.2% with ten homes sold. Close behind with 16 homes sold and an equally impressive growth rate of 21.1% is Plantation Woods. The lowest on the list is Forest Heights which has posted 16 home sales and has already reached 10.0% (through mid July).

When the year is said and done, there will likely be more than 20 neighborhoods with ten or more sales and better than a 10% rate of appreciation, which is incredible.

Right now, all existing home sales have an average rate of growth of 5.7%, which is an annualized rate of 8.4%, well more than double an average year (going back to 1991). Existing homes in Tallahassee are appreciating, now is a great time to own a home.

Worried About A Bubble?

Anybody who lived through the market swing from 2005 to 2012 is likely to read the information above and worry about another housing bubble.

I believe they should be worried, but not about a bubble any time soon. Actually, the opposite is what we need to be concerned with.

A housing bubble occurs when demand rises and causes builders to go into overdrive to meet that demand. One way to know a bubble is coming is to monitor the supply and demand dynamic (I publish a report on this monthly RIGHT HERE).

There is no chance of this coming about any time soon, short of a significant and severe depletion of jobs in Tallahassee. In fact, demand is still lower than it was during the pre-bubble years.

What's different this time is that builders are not rising to meet the demand from homebuyers. Tallahassee is building at a level that is less than 50% the rate we saw in the 1990s, and only a quarter of the rate at which homes were built right before the bubble.

The Real Housing Market Dilemma

The problem Tallahassee is facing right now is low inventory, and that means we can expect crazy high levels of appreciation for years to come. If the jobs market grows as we expect with a new Governor next year, it will only make the inventory shortage greater.

If you have been wanting to buy a home, do it now. You will gain a lot of equity in the coming months and years, and it is possible that you might not be able to afford a home within a few years. If mortgage interest rates move higher, the more expensive home with even higher monthly payments could very well be beyond your reach.

As far as future bubbles, you are safe. Simply watch our monthly inventory reports, and if you see the market moving in the other direction (inventory levels rising above 6 months of supply), you will have plenty of time to sell your home at the top of the market.

Home Sales In Tallahassee's Highest Appreciating Neighborhoods

The following table shows the most recent 1,000 sales in Tallahassee's top appreciating neighborhoods. It's important to note that you can sort the table by any column heading if you want to drill-down for more information.