Don't Be Fooled By Seasonal Changes In Real Estate Supply

This morning's weekly special real estate report shows a continued drop in both the real and relative supply of homes for sale in Tallahassee. This falling supply is good news for the entire market, in that the supply side appears to be working towards finding a balance to our historically low level of demand.

Just Released: The December Housing Report has been published and is available for download by clicking on the image to the right.
This one page report shows supply and demand for homes in Tallahassee, by price range and area.

To provide some context for just how low current demand for housing really is, we maintain a graph that looks at the current number of homes for sale in Tallahassee (supply) and compares it with historic home sales (demand) in order to see how the real estate supply and demand dynamic would look today.

The real estate graph above shows us that our current supply would have been very healthy for the Tallahassee real estate market from 2003 through 2007. This means that the number of buyers active in the market during those years would have burned through our current inventory in less than 6 months. Unfortunately, there are significantly fewer homebuyers in our current market.

Real Estate Supply And Demand In Tallahassee

The next real estate graph shows our current real estate supply and demand levels in the Tallahassee housing market.

In the real estate graph above, the green triangles show the number of homes sold each month, while the red boxes show the total number of homes for sale in the Tallahassee MLS. The blue lines measure relative supply (inventory at the current rate of demand, measured in "months of supply"). The orange horizontal line shows where the blue bars need to be for market equilibrium (balance between real estate supply and demand).

The current level of 10.6 months of supply of homes is the lowest we've recorded since summer's end in 2008. Unfortunately, this is still a very strong imbalance with high supply levels creating a very strong buyers' market. Home values will continue to decline as the competition for good buyers is still more heated than the competition for good homes.

Home sellers should understand that even though supply is dropping, there are still thousands of homes waiting in the wings for increased demand. We will continue to see the market have supply side abundance for many years to come, meaning pricing pressures are not going to go away any time soon.

Our advice has not changed in the past five years for home sellers. Either choose to hold on to your home for 5 to 7 years (or longer), or sell your home now and sell it as fast as you can. With home values dropping, waiting to sell for a few months or a few years is only going to mean you will be selling it for less.