Somebody recently told me that Southwest Tallahassee real estate looks like a train wreck. If you took a look at this month’s Tallahassee Housing Inventory Report, you will see just what he means. The SW quadrant of our market looks like a “used house lot,” with existing home inventory levels exceeding two years worth of supply.
Long-time reader and investor in the Tallahassee real estate market “TLH Landlord” wrote:
Joe, SW Tally looks pretty much like a train wreck in terms of
housing inventory. Two questions about that: 1) what is wrong on
that side of town, 2) what do the total numbers (column labeled
“ALL”) look like if you through out SW Tally? I’m thinking that the
housing recovery will proceed at different speeds on different
sides of town.
What Is Wrong With Southwest Tallahassee?
SW Tallahassee real estate has been grossly over-built. Tallahassee has usually done a very good job of keeping speculative home building under control, but when several national magazines named Tallahassee the best investment market in the US, we saw way too much construction for what we could consume. Consequently, we have 26 months of supply of existing homes in the Southwest quadrant of the Tallahassee housing market.
If you want to see what the rest of the Tallahassee housing inventory looks like, you can see each section by price range and see that the Southwest quadrant of our market is doing significantly worse than the others. Unfortunately, there is a value chain that exists in real estate, and the glut of homes in the SW will create pricing pressures on the rest of the market until all the glut is consumed.
Southwest Tallahassee Real Estate Example
The are many homes in the SW Tallahassee real estate market that are priced at incredible values. These properties are priced well below what it would cost to rebuild them and in the long-run are solid buys. Because of the glut, there are quite a few properties that offer great home value in Southwest Tallahassee.
In the example on the left, this home was purchased for $166K in 2006, but due to the glut it is now offered at $95K, a reduction of 43%. Unless we see a tremendous drop in minimum wage, you will not ever see a home like this built at a price near what it can be purchased for today. This is why I think it is a great example of a value buy in SW Tallahassee housing.
Joe Manausa, MBA
Century 21 Manausa & Associates