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Looking into the future of Tallahassee home sales | Donald Pickett

For the last 10 years or so, I could look at the yearly cyclical pattern of home sales in Leon County and have a pretty good idea of the months ahead.  Not so much now.  We had interest rates that hovered around 3.5% for the past few years.  Beginning in spring the mortgage rates began to climb in conjunction with the Fed’s increases.

Realtors that have been in the business since the early '80s remember when the rate hit 19%.  While I doubt that will happen, the rate might still go above the current rate of around 7%.  While everyone wants to place the blame on someone, it is not a local, state, or national problem, it is global. While the national economists can try to help solve the problem by adjusting borrowing interest rates, home mortgage rates will be affected as a result.

This home in Benjamin's Run, built in 1992 sold Oct. 14, 2022 for $355,000.  It has 1835 sq. ft. with 3 bedrooms & 2 baths. It was under contract the day it was listed.
This home in Benjamin's Run, built in 1992 sold Oct. 14, 2022 for $355,000. It has 1835 sq. ft. with 3 bedrooms & 2 baths. It was under contract the day it was listed.

If you are in the market to buy a home and planning to wait until the mortgage rates go down, it is a real gamble.  Home prices are tending to go up due to availability and mortgage rates that are not stable.

We all know we are living in a very troublesome world with a multitude of problems that affect the economy.  Yes, the pandemic, war, politics, and maybe the most significant is climate change.  For all those that have poo-pooed climate change being a problem, I think most have awaken to the realization it is having a major impact around the world.

A shining example is the Mississippi River’s lack of water.  It has a significant effect on our economy, including moving grains to all parts of the world.  All these factors can impact our economy and future interest rates. So, it looks like it can be a bumpy road for our housing market as well.

Leon County Single Detached Homes 3rd Quarter, 2022.
Leon County Single Detached Homes 3rd Quarter, 2022.

The attached graphics showing the third quarter data for the past three years, gives you some indication as to where we are headed.  To give you further insight, I will update you with the October home sale picture.  New home builders must adjust prices because of availability of materials and increasing cost resulting in a higher price of housing offered for sale.

To buy, sell or both in today’s market is the question.

As with the financial market, the timing is likely the most important factor in buying and selling real estate.  As the age-old saying goes “Buy low and sell high” is the optimum.  Just as it is with financial investments, in real estate you need to be working with a professional who can help you achieve your goal.

Now is not the time to select a Realtor who is just a family member or friend regardless of their qualifications.  Yes, there have been times you just needed a warm body that could enter your real estate into the MLS or have a lockbox key to show you homes.

Sometimes your situation is such you do not have the luxury to pick your time for buying or selling.  Family and employment circumstances sometimes come into play. 

Let’s consider some factors in today’s real estate market in Tallahassee that come into play.  A major issue is the very low number of homes available for purchase.  A 6-month supply of homes is a “healthy” number of homes available for purchase.

Currently in Leon County homes listed for under $400,000 there is about a 2 months’ supply.  The “supply & demand” rule comes into effect resulting in a seller’s market with inflated prices being paid for homes.  Buyers are purchasing homes for more than appraised value or listed price.

Northeast Leon County Single Detached Homes, 3rd Quarter, 2022.
Northeast Leon County Single Detached Homes, 3rd Quarter, 2022.

A recent buyer told me his experience of buying a home here in Tallahassee. With the low availability of homes that met his needs, he spent a lot of time searching on the internet. He found a home of interest at 1:30 in the morning and called his Realtor for a showing at 7:30. After viewing, the buyer made a full price offer to the seller, who signed the offer. The seller in coming hours had cash offers of $20,000 and more from prospective buyers.

Home sales data for October was typical, with a slowing of sales, which will continue to the end of year.  Sales typically begin to increase in February.

Sellers and Buyer alike might find the current number of homes in Leon County, both resale and new construction (that are listed in the MLS) that are available for purchase by price range.

$100,000 to $150,000 (26), $150,000 to $200,000 (42), $200,000 to $250,000 (48), $250,000 to $300,000 (109), $300,000 to $400,000 (157), $400,000 to $500,000 (109), $500,000 to $700,000 (110), $700,000 to $900,000 (39), and $900,000 to $5,000,000 (34).  Currently there are a total of 673 homes (all prices) listed for sale, 273 sold in October, with an average of 50 days on the market at an average sold price of $353,635.

Donald Pickett, Realtor, GRI, Tallahassee Real Estate N Data Services, Coldwell Banker Hartung. Email at donpick@aol.com.

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This article originally appeared on Tallahassee Democrat: Looking into future of home sales for Tallahassee in 2023