Looking to buy a home in Tallahassee? Inventory still low, options likely won't check all boxes
This past summer I decided to sell my 2005 GMC SUV. A year or so ago I had checked the Blue Book value and it was about $6,000. I put an ad in Facebook Marketplace, with the help of my savvy young assistant who knows the market. I had multiple responses and sold it to the first one that responded for $14,000 cash.
Why was this the case? The automobile manufacturers could not get the parts to produce enough new automobiles to meet the demand. Consumers turned their interest to the used car market.
Builders are having similar problems getting needed materials for new home construction. With this shortage came a cost of materials increase for the builder that increased the price for the home additionally. There was short supply of “construction worker bees” who had found other jobs during the slow-down of home construction work.
Due to this price increase, the market for resale homes becomes more attractive to the home buyers. However, like the used cars, resale homes prices have been increasing to what the buyers are willing to pay.
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Fewer homes sold, higher prices
Look at the graphic of the sales and listings in Leon County for the past 3 years. These are new and resale homes entered into our MLS. The number sold this past year was 18% fewer than last year and the sold price has increased an average of 13%. The number of homes sold seems to be correlated with the new listing being entered into MLS.
Homes that sold for over $400,000 in the past 3 years all had an increase in the number of sales each year. The homes sold under $400,000; overall have decreased primarily due to availability and the increase of mortgage rates.
If you are a buyer and well qualified, you will have difficulty finding a home that meets your needs.
The graphic of resale homes for the past two years looks troublesome for the months ahead for buyers. You find a home and there are other buyers that are interested in the same property. Hopefully you have a savvy Realtor to guide you to a successful purchase. The old phrase “he who hesitates loses,” comes into play. The current low supply of homes offers fewer from which the buyer can choose.
Why are the builders not building more homes to meet the demand? While I have already mentioned the shortage of materials and construction workers, there are some bigger problems. The biggest problem is the availability of land for development.
I have mentioned in my previous writing this is a problem in Key West being an island limited by the Atlantic and Gulf. Tallahassee is limited by plantations in the northeast, St. Joe in the southeast (they can develop as they please), the southwest by the Apalachicola National Forest and the Ochlockonee River in the northwest. This limits developers to small parcels, except for the development of a portion of Welaunee Plantation.
Factors for 'affordable homes'
When a developer finds a parcel for development there are a lot of factors to consider. The cost of the parcel, permitting cost, the infrastructure planning cost and construction, the design of the subdivision cost and governmental approval, the architectural planning, the cost of materials and labor, and then the marketing and sales expenses. That is a lot of cost. Then being able to find buyers that can afford the higher price of the home.
It is frequent mentioned that builders should build “affordable homes.” Considering all the expenses a builder in Tallahassee will have to produce a home that is affordable and profitable, for the lower-income market, here is what is offered in our MLS. In 2022 the lowest sold price was $136,000 for a new construction home.
Currently in MLS there is a new construction home available for $150,000. I am not able to give you a lowest price for a resale home since there are too many factors involved in the sold price as to whether the property is livable without renovations.
Mortgage rates and income
What is ahead for us in the coming months?
The graph with the trend lines shows the annual predictable closed sales. Last January we had 556 new and resale homes available for sale. Recently there are about 581 available. The big difference that is troubling is last January we sold 240 homes and this year 142.
The cost of living is more this year and there are fewer dollars available for the higher cost of housing. Current news regarding mortgage rates are they will remain around 6.5%. This is not such a problem for the wealthy who purchase the upper priced homes as illustrated in the graphic but will likely continue to be an issue for moderate to low-income buyers.
In February 2023, what did resale single family homes in Leon County sell for compared to the same period last year. In February 2022 there were 181 homes sold with an average price of $306,294. This year there were 145 homes closed (20% decrease) at an average closed price of $337,464 (10% increase).
In February there was a slight increase in the number of sold resale homes and the sold price. This may be the beginning of the annual upswing of sales activity. This will be affected by the supply of homes available for sale for buyers.
There are currently 242 resale homes available for sale in Leon County. We are very dependent on new listing to meet the demand. For the buyers, “it’s slim pickings” in trying to find a home that meets their needs and concessions must be made.
Donald Pickett, Realtor, GRI, Tallahassee Real Estate N Data Services, Coldwell Banker Hartung. Email at donpick@aol.com.
This article originally appeared on Tallahassee Democrat: Tallahassee housing market: Inventory low for buyers
