Tallahassee Real Estate - Permits and Sales Information

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Real Estate Agent with Joe Manausa Real Estate 8508880888

New Construction In The Tallahassee Real Estate Market

One bit of data that I pull every month is the Leon County Single Family Permit and Sales figures. We can look at the relationship between sales and permits to determine how new construction inventories are doing. We can also track trends. The following chart represents a 12-month trend of new construction permits and sales in the Tallahassee Real Estate Market.

real estate tallahassee fl

The chart shows us that the trend from August, 2005 until March of this year, we have been permitting more homes than we have been selling. Since April though, we have sold 75 more homes than we have permitted. This appears to be a change in the trend after nearly two years of building more homes than the market could bear.

One must remember that this is only new construction, and only single family homes in Tallahassee. This does not show the total picture, as resales are more than 2/3rds of our total market. But I do think this chart demonstrates why we are seeing inventories starting to flatten, and hopefully we will see inventories begin to drop.


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Joe Manausa, MBA, CRB, CRS | Broker / Owner | Century 21 First Realty

2365 Centerville Road | Tallahassee, Florida 32308 | 850-386-2001 | http://www.manausa.com/

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Anonymous
Sam

Joe

Are you sure the Permit number is right? According Census, we had 1502 pemits year to date as of end of Sept. That's average more than 166 permits per month

http://www.census.gov/const/www/C40/table3.html#monthly then, click on Sept 2007 Number or

here http://www.census.gov/const/C40/Table3/t3yu200709.txt and look For Tallahassee YTD number

Oct 31, 2007 05:29 AM #1
Rainmaker
1,160,527
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate

Great question Sam. I am very confident in my numbers. I buy my data through a large company that literally goes to the county courthouse on a regular basis for all of this information.

From what I can tell, the Census site gets it's data by sending surveys to builders. They are optional for the builder to complete and there is nobody that checks for errors (I have not seen nor been told of an audit methodology).

Additionally, I was not clear on whether they were counting condos and townhomes in there reports. There is such a thing as a 1 unit townhome. My data was for single-family residential units only.

I typically do not trust information gathered by the government because of the lack of accountability for the resulting product.

Oct 31, 2007 05:38 AM #2
Anonymous
Sam

Joe 

Thanks, the reason I asked is that your numbers seems to be worse than  the government's. I expect your number is right.  It's hard to believe we are averging only 75 permits per month. 75 permits mean 75 starts in few month.

 Thanks

Oct 31, 2007 06:32 AM #3
Rainmaker
1,160,527
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate
You're welcome Sam. But you say "worse," I say "better." We want slower construction right now so that the market can consume the high inventories of resales that are out there.
Oct 31, 2007 07:15 AM #4
Anonymous
Sam

Joe,

Not so fast my friend, your analogy is the same analogy I had in 2002-03. I was planning to buy a home at the time when home prices are moving up, with a small magnitude of course. I saw many builders started to build lots of home. I was thinking the supply of home will exceed the demand, thus price to fall

I was wrong at that time, now I realize it would actually work like this.

1.  Fed cut the rates to very low level, More Poeple buy new homes, builders took the order, then built. it took 6-9 month before  completion.

2. With more business, builders were buying more lands, then the land prices are going up; thus cost of the home going up

3.Home prices continue to move up, the real estate expansion developed into speculation, more people buying home.

4. Land inventory are depleted, now prices are shooting up.  Cost of a new home moving up in tandem with the price of lot.  Home flipping are now national pastime.  Tv channels are now having shows like Flip This House.

5. Fed raises interest rates, trying to cool the fevor.

6. speculators are getting out as home prices stop moving up, new home sales are stalled, inventory starts to swell.  builders stuck with lots of  spec house that nobody wanted.  Land deals dry up because builders can't sell, therefore can't buy.   (We are Here)

7. Many defaults on mortgages,  we see widespread contraction in housing market. Mortgages became very hard to get. A large downpayment is a must. Home prices are falling

8. Liquidation, many foreclosured properties are being auctioned off.  Everyone is bearish and scary, crying uncle.  By that time, half of the real estate agents and builders at the peak have exited the real estate market.

9. After few tough years, the cycle can start all over again

10.  Joe is on the top of the world again, fewer agents means fewer competition, thus better business for the survivors like Joe.  But he's having a hard time convincing people to buy homes, most people would rather be a renter after they heard so many horror stories about people lost everything after they bought homes.

That's my crystal ball, since yours was broken

Oct 31, 2007 09:07 AM #5
Rainmaker
1,160,527
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate

Woooahhhh Sam....

That's a lot to say. O.K. By the numbers:

1.  Fed cut the rates to very low level, More Poeple buy new homes, builders took the order, then built. it took 6-9 month before  completion. The Fed cutting rates will have no real effect on the mortgage market. Mortgages are tied to the bond market, not to the Federal Funds Rates.

2. With more business, builders were buying more lands, then the land prices are going up; thus cost of the home going up. Builder business is down; Builders are buying less land.

3.Home prices continue to move up, the real estate expansion developed into speculation, more people buying home. Lots of truth here. However, Tallahassee is still growing and with the boom of the college industry, I see investment in Tallahassee Real Estate recovering faster than most other parts of the country.

4. Land inventory are depleted, now prices are shooting up.  Cost of a new home moving up in tandem with the price of lot.  Home flipping are now national pastime.  Tv channels are now having shows like Flip This House. Not so sure I understand the point you are trying to make. I agree that flipping is a sucker bet and that investors usually lose more than they gain (professional builders who flip can do well at this, but not passive investors).

5. Fed raises interest rates, trying to cool the fevor. Refer to point #1.

6. speculators are getting out as home prices stop moving up, new home sales are stalled, inventory starts to swell.  builders stuck with lots of  spec house that nobody wanted.  Land deals dry up because builders can't sell, therefore can't buy.   (We are Here) Oversimplification, but I agree in general.

7. Many defaults on mortgages,  we see widespread contraction in housing market. Mortgages became very hard to get. A large downpayment is a must. Home prices are falling Here is where your crystal ball begins. I do not see "large downpayment" being mandated by the industry. Traditional borrowing standards (like making sure the borrower plans to repay....) will become the norm again.

8. Liquidation, many foreclosured properties are being auctioned off.  Everyone is bearish and scary, crying uncle.  By that time, half of the real estate agents and builders at the peak have exited the real estate market. This is a crystal ball jump. Our demand is still higher than '04 due to growth. We shall have to see....

9. After few tough years, the cycle can start all over again This I agree with. A few tough months/years are ahead.

10.  Joe is on the top of the world again, fewer agents means fewer competition, thus better business for the survivors like Joe.  But he's having a hard time convincing people to buy homes, most people would rather be a renter after they heard so many horror stories about people lost everything after they bought homes. We certainly have a lot of agents right now. The death of the beach market brought all of those agents inland. Totally disagree on home ownership. People want to own, not rent. Some are just forced to rent. National home ownership rate went to all-time high every year for the past five years or so, it is time it went back down to the mid-60's (ironically, the federal government reported this all the time with great pride, but it was the dangerous loans that created this statistical boom).

That's my crystal ball, since yours was broken I think yours has a few cracks in it as well.

I hope you didn't get writers cramps, but thanks for the comments.

Oct 31, 2007 09:44 AM #6
Anonymous
Sam

Yes, Fed controls Fed Fund Rates, or the short term overnight lending rate between banks. Fed Fund rates is used to set the LIBOR rate.  Yes the mortgage rates are tied to the 10 year bond market, but the mortgage rates you refered to is the conforming mortgage rate (Sold to FREDDIE and FANNIE). 

When A person buys a mortgage with no money down, there were two mortgages created:

1. First Lien Mortgage or 80% of Home value, it's sold to Fannie or Freddie, they will use the ten year rate to hedge their portfolio, therefore, the conforming loan is tied to the ten year bond

2. second lien mortage-or home equity loan 20% of home Value. Lent out by the Mortgage brokerage, it's set at Libor rate or at prime rate---- tied to the FED Fund.

As Easy Al cut rates to 1%, everyone was qualified to buy a house.  That's the main culprit for the euphoria in Real Estate.

How the real estate market will unfold next two years? I think my crystal ball is solid, no cracks

Oct 31, 2007 12:16 PM #7
Anonymous
Sam

One more thing, many of these home equity loans, interest only exotic mortgages and Subprime loans are sold to wall street, not Freddie or Fannie, Their rates are tied to Libor. 

With asset back securitis market effectvive shut down since august, these crazy mortages are no longer available.  because nobody wants to buy them after heavy losses in them.

I am not bullish until prices fall further.

Oct 31, 2007 12:21 PM #8
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Rainmaker
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