Tallahassee is the capitol of the sunshine state. While this city often gets overlooked due to the popular tourist destinations in the state, there are ample jobs and plenty of activities to see and do. The housing market is one that has been of the upmost concern, especially since the crash hit this area particularly hard. However, this region is showing growth and where there is progress in this market, it helps to level out the economic state.
A History of Increase
Looking back on the housing market sales over the past two years, it shows that Tallahassee finished strong. While continuing this trend would be great in 2014, there are no guarantees. One must look at the numbers from 2012 to be able to make market predications. The housing market sold 1942 homes; this is a significant increase over 2011’s numbers. This is an increase of 11.5%.
Overall, the area sold 224 more homes than the previous year. The average time that a home sat on the market also decreased to 136 days. Factor in the processing and closing time of around 45 days, and this shows that houses are moving and not sitting on the market for years. Price is also up for this part of the state. The average sale of a home was listed at $210,169; this is also a good increase over the prior year’s average of $200,833 and equates to an upsurge of 4.4%.
While trends are looking up, what does this mean for the overall economic state of Tallahassee Well, it has everything to do with the job market. See, the more houses that sell, mean the more jobs that are created. In fact, The National Association of Realtors estimates that for the sale of two homes, it creates one new job for the region. So looking back at 2012’s numbers, there were 112 new jobs that were created just due to the housing market. The association also states that each home that is sold has the potential to generate more than $60,000 worth of economic activity. Using those numbers, it shows that 2012 had an economic impact of $13,440,000. With that kind of money, the city could certainly generate new jobs and get more people off of unemployment and government assistance.
Projecting The Future
Many people want to know what the housing forecast is for 2014. Currently, all things look to be on the upward swing. Unfortunately, things can change at the drop of a hat, and while the market is rebounding, it is still not as profitable as it once was. Continued growth is anticipated. By analyzing the data from home sales over a long period of time, it’s apparent that trends are moving upward. The one year movement for sales transactions is accelerating well and has overlapped the five year numbers. The numbers taken from the most recent months show even more growth than originally anticipated. The current numbers have surpassed five year trends and it expected to continue to increase.
The Interest Rate Can Determine The Market’s Future
While trends look good, there are some factors that can weight down the projections. The mortgage interest rates are beginning to increase. Part of the reason why so many people have been encouraged to buy a home is because of the ridiculously low rates. Looking back at the past 50 year period shows that the average interest rate was around 8.5%.
Today, those rates would be hard to swallow. That means that even a meager home at $100,000 would have a payment of around $990 a month, even with 20% down. At the current average interest rate of 4.5%, the payment would be about $780. So it’s easy to see that even a few points on the interest rate can make a big difference.
If the interest rates should rise, it could send a shock wave through the market. This would cause the value of the homes to plunge, which would drastically reduce sales. Rates are anticipated to rise, but the not to a level that would cause great alarm.
An Overcrowded Market Could Be An Issue
It is estimated that there are about 7,000 homes that are contemplating and need to be put on the market. In Tallahassee alone, there were recorded sales of 4,100 for 2013. It’s easy to do the numbers and see that if all these homes were to be put up for sale, the market would be overcrowded. When this happens it is called a shadow inventory. Any pent-up supply that is brought out all at once can cause the demand verses supply to be out of whack. Ultimately, the more homes that are available to buyers, the market values drop. Thankfully, the homes seem to be streaming back onto the market rather than just flooding at once. All of this seems to be good indication for continued sales.
The market looks good and is improving, but one of many things can send it backwards and cause great problems. Home builders have been on hiatus since the market crash. For 7 years there have been numerous contractors who have wanted to get back to work. In 2014, new construction is imminent, and it’s important that these new home builders don’t rush into the market with a vengeance. This can also cause over flooding in the market and property values will decline, not to mention these new homes will sit without selling.
The housing market has made enough recovery that is has established itself again. It can handle some shifts in the number of homes for sale or the interest rate, and it can even handle some new development. At this point and time, only extreme changes will impact the forecast, which are not foreseeable. The goal is to ease into higher rates, new construction and listing new homes. This will allow the market to remain steady and help the economy to continue to grow in Tallahassee.
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