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Inventory Levels Too High In Tallahassee Housing Market

08-20-11

Joe Manausa - Tallahassee Real Estate

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Office: (850) 386-2001

Mobile: (850) 508-1544

Watch For Trend Changes

If you want to know the beginning of the next phase of the housing market recovery, just keep an eye on the relative home supply. You can always track 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:

Inventory changes from growth to reduction.

Home Values Fall At Accelerating Rate

Year over year sales increase?

Inventory levels reach 6 months of supply (balanced market).
Home Values Stop Falling/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 chart below, we see that there is still more than a year’s supply of homes on the market, and we know of more “waiting in the wings.”

Sales Must Speed Up

Home sales are slowing since the end of the Homebuyer’s Tax Credit Program. It is going 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. Slowing sales have actually pushed us back 1 phase in the recovery!

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The Pending Home Sales Report Tells No Lies

11-30-10

Joe Manausa - Tallahassee Real Estate

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Office: (850) 386-2001

Mobile: (850) 508-1544

Pending home sales appear to be testing a new market bottom, as the rate of decline in homes under contract has crawled to a stop. This is very good news, as we cannot expect future home sales to rise if new sales contracts are on the decline.

We measure these new sales contracts, which the industry calls “pending home sales,” in order to get a picture of the future of closed home sales (typically 2 months into the future. By tracking contracts, these future closings are follow a consistent pattern.

In the real estate graph above, we observe that the past two weeks has seen some stabilization in what was a plummeting pending home sales report. We hope that this continues and that we can start see this trend rise from what we hope to be the “final” market bottom.

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Closed Home Sales Graph Shows Post Stimulus Collapse

11-30-10

Joe Manausa - Tallahassee Real Estate

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Office: (850) 386-2001

Mobile: (850) 508-1544

Home sales are falling, just as we predicted each time we tracked the pending home sales information from the Tallahassee Board of REALTORS Multiple Listing Service. We knew if pending sales were falling, then closed home sales had to follow suit.

Closed Home Sales Decline In Tallahassee

Closed home sales, tracked on a daily basis in the Tallahassee MLS, have declined steadily since the end of the Homebuyer Tax Credit (where closed home sales were pretty much completed by June 30, 2010.

The “market bottom” that we observed in August 2009 is still holding, but we have every indication to believe that a new one will present after the turn of the year. With pending home sales having reached a new market bottom, it is very likely that closed home sales will follow suit.

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