Joe presents an unexpected example regarding sellers with big home and the fact that they are breaking the law. This is the law of supply and demand. He clearly defines what happens to any market. Check it out to see what may be happening in your area.
I never would have expected it to happen, but the bigger homes for sale in Tallahassee are breaking the law.
The law of supply and demand. So I'm conducting a reader poll to see what everybody thinks is going on.
What's Going On With Big Homes For Sale
As I was collecting information for our Weekly Special Real Estate Report, I discovered something that defies one of the four laws of supply and demand for the big homes for sale in Tallahassee. For the sake of review, these four laws state:
If demand increases and supply remains unchanged, a shortage occurs, leading to a higher equilibrium price.
If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower equilibrium price.
If demand remains unchanged and supply increases, a surplus occurs, leading to a lower equilibrium price.
If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher equilibrium price.
Law #2 describes the Tallahassee real estate market in general for the past several years until recently. This year, the increase in demand for homes near the median (in both size and value) has increased, moving the market towards equilibrium.
But big homes for sale still suffer from a glut of inventory, thus we would expect to see values decline (a lower equilibrium price). While this has been the case for homes greater than 4,000 square feet, the opposite is true for homes between 3,000 and 4,000 square feet.
The real estate graph below shows how only the largest of the big homes for sale have seen depreciation this year:
We are wondering why big homes for sale (in Tallahassee, any home over 3000 square feet is much larger than the average home), so why have they seen a rebound in 2013?
Could it be interest rates making the homes more affordable? That still doesn't address the fact that supply still far outweighs demand. And with interest rates on the rise, the number of people who can afford these big homes for sale is falling fast. So what do you think is going on?
Reader Poll Seeks Answers Regarding Big Homes For Sale
Enough with mathematical analysis, we are turning to YOU, our reader.
What is going on with supply and demand for the bigger homes in Tallahassee? Please take the quick poll below, and leave us any thoughts or opinions in the comment box below. If we are hit with an interesting thought or idea, we'll share it in a follow-up blog post.
Remember, your thoughts and opinions drive the content at the Tallahassee Real Estate Blog. Please share your thoughts on the inventory of big homes for sale in Tallahassee so we know where to go from here.Joe Manausa, MBA
Century 21 Manausa & Associates