Tallahassee Real Estate Newsletter - Page 1 www.manausa.com (850) 424-1120 May 18, 2015

Improving Market Sustaining Gains

Joe Manausa, MBA

2066 Thomasville Road

Tallahassee, FL 32308

(850) 424-1120

info@manausa.com

AT A GLANCE

May

Housing Reports

have been

completed and

are posted at

Recent Housing

Reports

Please forward this

to everyone who

has a stake in the

Tallahassee real

estate market.

Remind them

they can

subscribe to it here

CONTACT INFO

Volume 15, Number 5

Unit sales, median price and median values continue to rise in Tallahassee

M edian home prices and median

home values are both rising

sharply now in Tallahassee.

Home values are now the same as they

were at the end of 2005 (and again at

the end of 2010), while home prices are

the same as early 2006 and the

beginning of 2010. So what does this

mean?

Anybody who purchased a home (and

did not refinance) prior to 2005 or after

2010 is likely enjoying an equity position

in their property.

Homeowners who purchased from 2005

through 2010 are likely still upside-down

in their homes, unless they paid cash or

have been repaying their mortgages with

an accelerated schedule.

As values continue to rise, expect to see

further growth in the number of homes

selling each month. The mass of owners

who have been waiting to sell (pent-up-

supply) are able to hit the market with

equity and also serve as buyers too.

Tallahassee Real Estate Newsletter - Page 2 www.manausa.com (850) 424-1120 May 18, 2015

Tallahassee Real Estate Volume 15, Number 5

Only the higher

price ranges will

remain in a

buyer’s market in

Tallahassee by

the end of 2015.

Relative Supply Of Homes Favors Buyers

T he relative supply of homes

(measured in months of supply on

the right vertical axis) currently shows a

market with far more homes for sale

than buyers currently demand.

Each price range in the Tallahassee real

estate market shows the number of

active listings (red bars) and the number

of closed home sales over the past year

(green bars). The resulting relative

supply of homes is shown as a blue line.

The yellow field demonstrates the level

in which the market is balanced, so if

the blue line falls within the yellow field,

we say that buyers and sellers are

negotiating under “normal” conditions.

If the blue line is above the yellow field,

than we call it a buyer’s market, as there

are far more homes than the current

rate of demand requires. Were the blue

line to fall below the yellow field, then we

would call it a seller’s market, with not

enough supply to satisfy the current rate

of demand.

Currently, we are seeing most price

ranges below $300,000 move into

market equilibrium.

I suspect only the higher price ranges

will remain in a buyer’s market in

Tallahassee by the end of the year.

It is important to do an analysis such as

this for each area and price range for

which a homeowner is considering a

sale, as not all areas are seeing the

exact same supply and demand

dynamic.

If one area is in balance however, we

often see demand shift away to an area

that is more favorable to buyers.

With 94% of

homebuyers using

the internet, today's

savvy home seller

can now get a

home sold without

using a real estate

agent.

Currently, we are

seeing most price

ranges below

$300,000 move

into market

equilibrium.

Tallahassee Real Estate Newsletter - Page 3 www.manausa.com (850) 424-1120 May 18, 2015

Low mortgage

interest rates

and rising home

values appear to

be combining to

strengthen the

market.

Tallahassee Real Estate Volume 15, Number 5

Free Report

Search Homes

O ne way to observe changes in the

market without being influenced by

the seasonality that occurs during the

year is to compare the number of home

sales during the current month with

sales made during the corresponding

month the year prior.

The graph below does just that.

Every month shown in the graph

represents the change from the same

month a year prior. If the line extends

towards the top of the graph in green,

then that month sales were better than

the month a year prior. The opposite is

true for downward extending red lines

which show a decline in year over year

home sales.

April’s 28% growth over April of 2014

represents the eighth consecutive month

of gains.

The recovery is very well pronounced, as

14 of the past 17 months have been

gains. Better yet, only 4 of the past 33

months have shown a backwards

movement from the year prior.

More To Come?

Low mortgage interest rates and rising

home values appear to be combining to

strengthen the market.

As each of the past two months have

shown 20+% gains, it appears as if

2015 is shaping up to be a very good

year in Tallahassee’s housing recovery.

Year Over Year Home Sales Improve (Again!)

Tallahassee Real Estate Newsletter - Page 4 www.manausa.com (850) 424-1120 May 18, 2015

Tallahassee Real Estate Volume 15, Number 5

Relative Supply Of Homes Continues Decline

We consider a

market with 6.0

months of supply

of homes a

balanced market,

so it is still a

buyer’s market.

S ince the collapse of the housing

market in 2006, there has been an

imbalance between the number of

homebuyers and home sellers.

Initially, the problem was too many

sellers needing to sell and the number of

buyers in the market was declining.

But after a few years, the problem

shifted to the demand side, where there

were fewer than historically normal

numbers of buyers wanting to purchase

a home. This problem persists today, but

is improving with each month that goes

by.

In the graph above, we track the total

number of homes for sale (red line

measured on the right vertical axis) and

the total number of homes sold each

month (also measured on the right

vertical axis).

We then divide the current inventory by

the annual rate of sales to produce the

relative supply of homes, shown as a

blue column and measured on the left

vertical axis).

The blue line measures the one-year

trend of the relative supply of homes,

and this trend has dropped to roughly

7.0 months of supply. We consider a

market with 6.0 months of supply of

homes a balanced market, so the

excess of supply measured in our

current market conditions means that it

is still a buyer’s market.

While this is true for the overall market,

it is not true for every price range and

every area. For this reason, if you are

thinking of selling a home, you need to

get a real estate agent to help you

determine your best asking price.

Tallahassee Real Estate Newsletter - Page 5 www.manausa.com (850) 424-1120 May 18, 2015

Where Buyers Are Buying Homes in 2015

Tallahassee Real Estate Volume 15, Number 5

W hat’s hot and what’s not?

Killearn Lakes is leading all

neighborhoods with 57 closed home

sales with an average price of $194,049

in the Tallahassee MLS through mid

May.

Southwood has recorded 49 homes sold

with an average price of $308,975 while

Killearn Estates reports 41 homes sold

at an average price of $238,122.

These three neighborhoods continue to

dominate the attention of homebuyers in

T a l l a h a s s e e , e a c h w i t h

double or more of the sales of the next

most active subdivisions.

Golden Eagle Plantation continues to be

the highest priced of the active

neighborhoods, where average home

prices have recovered up to $426,462.

University Green and Camelot Park have

made an uncharacteristic jump into the

top ten, with average prices of

$100,048 and $146,308 respectively.

The housing market is definitely picking

up (and not just due to seasonal

fluctuations), so look to see all of these

top neighborhoods to remain active.

Get Answers Now

Selling A Home?

NE Tallahassee

Killearn Lakes is

leading all

neighborhoods

with 57 closed

home sales in the

Tallahassee MLS

through mid May

Tallahassee Real Estate Newsletter - Page 6 www.manausa.com (850) 424-1120 May 18, 2015

Tallahassee Real Estate Volume 15, Number 5

Sales Success Rate Strengthens

O ne statistic that we have been

maintaining in this newsletter is

a measurement that we refer to

as the “Sales Success Rate,” but with

this edition, we are switching our

methodology and will thus be changing

the name of this statistic to the “Home

Seller Failure Rate.”

What we are now measuring is the

percentage of home sellers who succeed

and fail while listed with a real estate

company.

So long as the home seller does not

change companies, we consider the

listing to be one continuous opportunity

to succeed or fail. This is important to

note, as many listing agents cancel and

renew listings multiple times. Most

systems measure these as unique list-

ings, thus a home could be listed 20+

times, which could be measured as one

success with 20+ failures. Our process

Nearly 8 of 10

home sellers find

success

getting their

homes sold

eliminates duplicate entries. As soon as

the listing permanently leaves the

market or moves from one company to

another, we consider it a failure.

Recently, the one-year trend of the

failure rate (red dotted line in graph) has

been on a steady decline, indicating that

nearly 8 of 10 home sellers find success

getting their homes sold.

Important Note

There is no absolute way to measure

success or failure, as one could argue

that a home seller who lists with 10

consecutive companies until finally

selling did find success with the last

company. Conversely, look at some of

the current sellers from 2012 that are

still with their initial company (they will

be deemed a success if they sell with

their initial company (even four years

later?). So use this information as a

relative failure/success rate to identify a

weakening or strengthening market.

Tallahassee Real Estate Newsletter - Page 7 www.manausa.com (850) 424-1120 May 18, 2015

Tallahassee Real Estate Volume 15, Number 5

The seasonal

rise of homes on

the market has

made it so that

only the lower

price ranges are

in or moving

towards a

balanced market

Market Equilibrium In Tallahassee

When we look at the supply and demand

of homes in Tallahassee, we find many

price ranges that have found market

equilibrium.

In the chart below, we see that there is

over six month’s supply of homes on the

market, with just homes priced above

$300,000 continuing in a glut.

Sales Must Continue To Increase

Home sales have picked up

again, though the current rate of

sales is still slower than what we

experienced in the 1990s. It is

going take a return of normal

sales rates for our market to expel the

glut of homes for sale, along with the

excess supply of homes that exist above

$300,000.

Market Forecast

Knowing the five

sequential phases

in a market turn

allows us to

anticipate current

and future market

changes.

Information in the report above shows relative home supply (months of supply based

upon the current rate of sales). For example, there are 5.8 months of supply of homes

priced between $250K and $300K in the Northeast, but 8.9 months of

supply of the same priced homes in the Northwest.

Watch For Trend Changes

I f you want to know the beginning of

the next phase of the market turn,

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:

1. Inventory changes from growth to

reduction.

2. Home Values Fall At Accelerating Rate

3. Year over year sales increase?

4. Inventory levels reach 6 months of

supply (balanced market).

5. Home Values Stop Falling/Start Rising.

Now Hiring !

Tallahassee Real Estate Newsletter - Page 8 www.manausa.com (850) 424-1120 May 18, 2015

S hort sales are on the decline and

thus far in 2015 represent 17% of

all distressed home sales.

I suspect this is primarily due to the

termination of the Mortgage Forgiveness

Tax Relief Act which made selling short

very attractive to a homeowner who

owed more on a home than it was worth.

But there has been movement to extend

this benefit for two more years:

Tax Relief Update

Congressman Tom Reed (R-New York)

introduced the Mortgage Forgiveness

Tax Relief Act of 2015 (H.R. 1002) on

February 13, and that bill is now being

heard in the House Committee on Ways

and Means.

Tallahassee Real Estate Volume 15, Number 5

Short Sale Tax Relief Update

Both bills would

extend relief to

homeowners on

forgiven mortgage

debt through

2016

Betton Homes

The “Bobbins”

Buckhead

Bull Run

Glen At Golden Eagle

Golden Eagle

Highgrove

Indian Head Acres

Killearn Acres

Killearn Estates

Killearn Lakes

Ox Bottom Manor

Piney-Z

Southwood

Summerbrooke

Weems Plantation

Woodland Drives

Distressed Properties

Arms Length Homes

Golf Course Homes

Short Sales

Foreclosures

Waterfront Homes

Two weeks later, Senators Debbie

Stabenow (D-Michigan) and Dean Heller

(R-Nevada) introduced a similar bill

(S. 608), which is currently in the Senate

Banking Committee.

Both bills would extend relief to

homeowners on forgiven mortgage debt

through 2016. The bills would allow

homeowners to exclude the forgiven

debt from federal income tax forms and

not report it as earned income.

With the way that home values are

recovering, this final two-year renewal is

likely all we would need in Tallahassee.

For current news and further updates on

this issue, check out our Mortgage

Forgiveness Tax Relief Updates page on

our website.

Tallahassee Real Estate Newsletter - Page 9 www.manausa.com (850) 424-1120 May 18, 2015

Links To Relevant Articles Waverly Hills Housing Report

S o you want to buy a house priced

b e t w e e n $ 2 5 0 , 0 0 0 a n d

$350,000. Check.

You want great access to downtown

Tallahassee. Check.

It's got to be "inside of I-10." Check.

And ideally along the Thomasville Road

corridor. Check.

Well, you must be looking for Waverly

Hills. [Read More]

If You Were To Move, Where

Would You Move Next?

T here is a new type of property owner

whose ranks are growing since

2009.

It's that group of people who have lived

in their present home for several years

and are contemplating a move.

Unfortunately, for the first time in

history, they do not have the equity

required to both sell their homes and

make a decent down payment on the

next home. [Read More]

Something Every Home Seller

Should Demand From Their Agent

T here is something relatively new

that home sellers should require

from the real estate company that they

employ to sell their home.

To the uninitiated, this will likely be

something that you have never heard of,

or at the very least, never understood its

importance to help homeowners get top

dollar for a home.

Before we get into the details of this

"must have" capability of your real estate

Tallahassee Real Estate Volume 15, Number 5

Feedback Wanted

Can We Help?

Selling A Home?

Sell it now, sell it

fast, and move to

the home that you

desire

Homes For Sale

Current Market Time For All

Homes Now On The Market

T his is a compilation of all current

listings of homes on the market in

Tallahassee, shown by the date their

current listing company put them in

the Tallahassee MLS.

This does not consider their previous

attempts to sell with other companies.

But if they have stayed through

multiple listing periods with the same

company, they are included in this re-

port. [Read More]

listing agent and company, it's important

to understand our belief that the role of

the real estate company is to generate

multiple buyers for each home they are

hired to sell. The concept of "it only

takes one buyer" is absolutely wrong, it

takes "more than one" to create the

environment that causes buyers to

bid-up the value of a home.

So with that explained, what is this new

requirement of your real estate

company? [Read More]