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Joe Manausa - Tallahassee Real Estate

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Relative Home Supply Report Reveals Current Trends

10-07-09
Joe Manausa - Tallahassee Real Estate

Download The Tallahassee Housing Supply ReportThe relative home supply in Tallahassee improved again during the month of September. For new readers to the Tallahassee Real Estate Blog, relative home supply is the supply of homes for sale in Tallahassee, measured in months of supply, relative to the current demand for homes. By paying close attention to the supply and demand dynamic in Tallahassee housing, we can anticipate current and future housing market moves.

Valuable Home Supply Report

The report is valuable for all consumers, whether you want to buy a home in Tallahassee or sell a home in Tallahassee, it is good to know what competition exists for each area and each price range.

The housing report is broken down into the four quadrants of the Tallahassee real estate market:

  1. Northeast Tallahassee homes
  2. Northwest Tallahassee homes
  3. Southeast Tallahassee homes
  4. Southwest Tallahassee homes

Relative Home Supply Dropped In September

The relative supply of homes for sale in Tallahassee dropped by about 10 days worth of inventory during the month of September. The real estate chart below shows how each price range changed during the month. Figures in red represent a reduction in the inventory of homes, while figures in black show growth in the inventory.

Tallahassee Home Supply Changes October 2009

While inventory reduction is always good news, we still have a long way to go. The Northeast quadrant of Tallahassee was the only area that showed improvement, but it showed enough to carry the entire market totals. The number of homes for sale in Tallahassee is still way too high. A balanced market is 6 months of supply, and we do not see this level in any area or any price range in the Tallahassee housing market. But we are starting to see some bright spots in certain price ranges …

[click this link to view area and price range reports…]

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Tallahassee Home Sales Report By Zip Code

10-06-09
Joe Manausa - Tallahassee Real Estate

I was having a conversation with a customer yesterday about Tallahassee subdivisions and Tallahassee zip codes, or more specifically what was happening in various areas of the Tallahassee housing market. Even though she is coming to Tallahassee from another market out west, she was able to have a pretty solid grasp of where she wanted to live.

By using the Tallahassee real estate blog, she was able to differentiate the different housing styles and amenities of Golden Eagle Plantation versus Southwood, and she had narrowed down her desired area to two specific zip codes. She even had specific questions about the characteristics of over 10 different Tallahassee neighborhoods. I can tell you, the amount of information a home buyer can learn before even getting to Tallahassee has changed so much in the past 10 years.

Tallahassee Home Sales By Zip Code

Our conversation got me thinking that it might be a good time to update our “Tallahassee Home Sales By Zip Code” information. I haven’t reported this kind of information in quite some time, so today we’ll look at both unit sales trends by zip code as well as average home prices by zip code in the Tallahassee real estate market.

Tallahassee Home Sales Graph By Zip Code

There are no real surprises in the real estate graph above. Each Tallahassee zip code has seen the number of home sales drop over the past three years. The most active zip code continues to be 32303, followed by 32312. But when we look at pricing, we find a completely different story.

[click for more Tallahassee Zip Code Graphs…]

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FHA Loans Gaining Popularity In New Mortgage Market

10-05-09
Joe Manausa - Tallahassee Real Estate

Do you ever wonder how much lending practices really affected the Tallahassee housing market? We read so many stories about “predatory lending” and abused government loan programs, that I got a little curious and decided to check out the history of mortgage loans in Tallahassee.

I decided to limit my sales information to “arms length home sales” only, for two basic reasons. First, it would reduce the amount of sales that I would have to screen, and second, it would represent a truer picture of the normal real estate lending practices in Tallahassee.

Different Home Loan Types In Tallahassee

Over the past twenty years, there have been five main sources of funds for home buyers in Tallahassee. Home buyers have completed their purchases with conventional financing, FHA financing, Cash, VA Loan financing, and individual financing. I was a bit surprised to see that FHA has only financed 16% of the closed home purchases since 1991.

Home Loan Picture By Financing Type

FHA Loans Becoming More Popular In Tallahassee

The popularity and usage of FHA loans is growing in Tallahassee. When we look at a graph of Combined Loan To Values in closed arms-length home sales in Tallahassee, the reason begins to become mighty clear.

[click to see graphs of FHA and Conventional Mortgage loans…]

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New Report Links Housing Bubble To Growth Management Policies

10-02-09
Joe Manausa - Tallahassee Real Estate

A new white paper was released yesterday by the Cato Institute which boldly claims that the cause of the housing bubble isn’t what everybody else has been talking about for the past few years. In this policy analysis, Randy O’Toole argues that the blame rests on a regulatory system known as growth management, saying

Some people blame the Federal Reserve for keeping interest rates low; some blame the Community Reinvestment Act for encouraging lenders to offer loans to marginal homebuyers; others blame Wall Street for failing to properly assess the risks of subprime mortgages. But all of these explanations apply equally nationwide, while a close look reveals that only some communities suffered from housing bubbles.

Growth Management In Tallahassee Real EstateNeedless to say, I found the topic intriguing and thought I would provide a “readers digest” version of my interpretation of the paper today. This is most likely not a critical read for somebody looking to buy or sell a home, but if you are a concerned citizen and wonder why housing costs are so high, this is a well written paper worthy of your attention. You can download Randy O’Toole’s Growth Management Policy Analysis paper in it’s entirety right here.

Usual Suspects Only Fueled The Fire

It has always been my opinion (at the street level) that the housing bubble was caused by a new, vigorous apetite for housing that began in 2000 because of many colliding factors:

  • GSEs (Fannie and Freddie) were created to make home ownership possible for all
  • The crash of the tech stocks caused many to pull money from mutual funds
  • Excess money out of the market created boom in 2nd home market
  • Baby boomers invested in 2nd homes
  • As the housing market started to cool in 2004, new loan programs were created to keep a hot market growing
  • The subprime market boomed, pumping in even more money for lenders to use to create loans

I have always felt the real culprit in all of this was consumer greed, and I am not so sure that this is not still my belief. One year ago, I wrote a blog about the comments made by then Treasury Under Secretary for International Affairs David McCormick during an interview on CNBC where he discussed what the government planned to do to restore stability in the global markets. In a nutshell, this is how he explained the market meltdown:

Regulators and investors alike showed a growing complacency toward risk. These factors blended into a dangerous cocktail of underlying conditions ripe for instability.

This imbalance between risk and reward was most evident in the U.S. housing market, where lenders significantly loosened credit standards, particularly for a new generation of adjustable-rate mortgages. Yet aggressive financial innovation went well beyond mortgages. Banks and brokers created an alphabet soup of products with simple names like CDOs, CLOs, and SIVs, which were in fact complex and opaque investment products and structures. Credit-rating agencies responsible for assessing and rating these assets, as well as investors who purchased them, failed to question the chances of these underlying investments going bad.

Even one year later, I think this opinion stated by McCormick is spot on. Easy money made buyers out of all of us (which does not excuse any of us from being part of the causation). However, rather than view easy money and risk complacency as the reason (for the bubble), I have to say the Mr. O’Toole’s paper has me understanding how Growth Management initiatives most likely would have lead us to the same condition at some point in time.

Growth Management Creates Artificial Shortages In Supply

[click to see supporting graphs and analysis of O'Toole's Growth Management Policy Analysis…]

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How To Properly Understand Real Estate Trends

10-01-09
Joe Manausa - Tallahassee Real Estate

Real estate trend analysis is the process of collecting historical real estate sales information and attempting to spot a pattern, or trend, in the information. If we are vigilant, we can identify trends and trend changes even as they happen. I think we often are surprised with market movements when key trend tracking should have had us ready for the moves that are upcoming.

The Tallahassee Real Estate Blog has made a commitment to continually monitoring the Tallahassee housing market. We post all kinds of charts, graphs, and analysis of the Tallahassee real estate market and we report trends and trend changes as we start to see them occur. We feel that our real estate market forecasts will be more accurate than any others due to this commitment. Additionally, we publish a free real estate newsletter to which you can subscribe in the right sidebar of the Tallahassee Real Estate Blog.

During the course of the past two years, we have received a lot of feedback and correspondence from readers, home buyers, home sellers, and real estate professionals. Often times, I have seen many of these people are a little confused with some of the analytical processes that I employ so I thought I would use today’s blog to explain the importance of real estate trend analysis and how to differentiate between short term trends and long-term trends.

Tallahassee Housing Inventory Trend Analysis

In order to demonstrate the differences between short and long-term trend analysis, we will look at the changes in housing inventory levels in Tallahassee. This first real estate graph can be found on the Tallahassee Real Estate Market Bulletin, a site updated twice per week with charts, graphs, and analysis of the Tallahassee housing market. It shows the changes in Tallahassee inventory of homes for sale on a daily basis.

Tallahassee Real Estate Market Inventory Change Trend September 30 2009

We will look at each trend in this graph one at a time, in order to describe the affect of seasonality and odd behaviors (noise) that occurs in the market all of the time. We will start with the short-term inventory levels in Tallahassee housing and conclude with the long-term inventory levels. These graphs show the net resulting inventory growth due to homes being added to the market (new listings) combined with homes leaving the market (sales, canceled and withdrawn listings, and expired listings). So, on a day that had 10 sales, and 10 listed that expired or canceled, we would record a zero “0″ for inventory change. Days where inventory change is positive, we see the glut of homes for sale growing; days where we see inventory change is negative, we know that the glut of homes for sale is being reduced.

Each graph will include a description of what we are seeing as well as conclusions that are justifiable from the graph. The left margin of each graph shows inventory change on a daily basis. The values go from +4 down to -16, so as an example, if the point on the graph you are viewing is at -6, that means the trend that day showed the number of homes on the market was 6 fewer per day for the entire trend period (30 days in the graph below).

[click to view each trend graphed and explained separately…]

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