Two Opposing Trends Now Colliding In The Housing Market

By
Real Estate Agent with Joe Manausa Real Estate 8508880888
https://activerain.com/droplet/4fxD

I'm wondering if a reader can bring to light a plausible explanation for the strange occurrences among homebuyers over the past two months.

In case you missed its release a few days ago, we published the Manausa Market Infographic for the month of March and it shows a continuing trend that is both alarming as well as mysterious. Please take a look at our infographic and tell me what is going on in Tallahassee?

Infographic Provides Picture Of Housing Market

Manausa Market Infographic 3-2014They say that a picture is worth 1,000 words, though this was disproved by a classmate of mine at West Point when he tried to submit a 9,000 word paper with a picture in lieu of the 10,000 word assignment that was due.

Nevertheless, I prefer to use visual images such as charts, graphs, and diagrams for the purpose of representing data or information in an easily understandable manner. This is why our monthly infographic is so important when analyzing the Tallahassee housing market.

Opposing Trends Among Homebuyers

So what big mystery did our new infographic unveil?

Well, if you look at the bar charts that compare March 2014 with March 2013, you will see growth in three of the four measured statistics. In March, there were more new listings, more new closed sales, and even more failures (homes that left the market without selling) than there were in March of last year.

But the second bar chart shows that new contracts were down 57% last month! And in the February Infographic, we saw new contracts down 25% when compared to February of 2013. So what does this mean?

Is Homebuyer Activity Really Declining?

If we were to only study new contracts (homebuyers that changed to contingent or pending status), you would have to conclude that buyers are leaving the market at a fairly rapid pace. In fact, when we graph new contracts alone, we see a steady declining trend turn into a fairly rapid declining trend this year.

Tallahassee homebuyers Under Contract

But this is not the only 365 day trend that we study, as we know we must monitor the entire market in order to stay ahead of coming changes. And that is where the mystery unfolds.

The following real estate graph shows the 365 day trend of closed home sales in Tallahassee.

Closed Home Sales In Tallahassee

As you can see, it is quite opposite of what we observed when looking at new contracts.

Real Estate Mystery Uncovered

So we have new contracts declining, but closed sales are on a steady climb. Just to clarify, this means that fewer people are "agreeing" to buy real estate while simultaneously more people are taking ownership of homes every day. How can these diametrically opposing trends continue?

I would love to see our local and national readers opine on what is happening in the Tallahassee real estate market. I have a few theories that I will share in the near future, but I do not want to taint the thoughts of our readers who might be able to solve this mystery.

So if you think you have an idea of why new contracts on Tallahassee homebuyers are slowing, all the while closed sales are on the rise, simply leave a comment below and help us solve this great mystery.

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Ambassador
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Could be inventory is down.  There are still many homes with negative equity that have been rented or sit empty or owners simply decide to postpone selling.

Contracts and closings rely on inventory and when it's not there, low sales are the result.

Employment is down too, despite the phony DOL numbers.  Insecurity affects housing as much as anything else.

Apr 16, 2014 08:55 PM #1
Rainmaker
1,180,565
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate

I'm not sure I understand Lenn. closings are up, new contracts are down. If we see closings start to decline, all the data makes sense. But we have yet to see closings decline. So how is it that closings are on the rise, yet contracts have been declining?

Apr 16, 2014 09:03 PM #2
Rainmaker
2,676,856
Debbie Gartner
The Flooring Girl - White Plains, NY
The Flooring Girl & Blog Stylist -Dynamo Marketers

Maybe there are more FSBO's and either contracts not happening for some of those and/or not recorded properly.

Apr 16, 2014 09:32 PM #3
Rainmaker
2,676,856
Debbie Gartner
The Flooring Girl - White Plains, NY
The Flooring Girl & Blog Stylist -Dynamo Marketers

Or maybe in previous year, there were lots of contracts the fell through so an artificially high base.

Apr 16, 2014 09:33 PM #4
Rainmaker
1,180,565
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate

I think short sales had a significant impact on this (multiple contracts, falling through) Debbie, but the number of contracts lately has been far lower than the number of closings, and closings are still not at our pre-boom/bubble numbers.

Apr 16, 2014 09:38 PM #5
Ambassador
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Joe.  New contracts rely on inventory.  If inventory of available homes is low, contracts will be few.

I'm not contradicting any of your info.  Simply reflecting my experience in a market with low inventory.

We still have a huge number of home owners under water.  Our 5-7% increase hasn't made up for the 30% decline in market value over the past few years.

Apr 16, 2014 10:08 PM #6
Rainmaker
1,180,565
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate

Thanks Lenn, that makes sense. I suspect our markets are similar, except we are heading towards the inventory problem, ... but not there yet. We still have 7 months supply, and no price range is below 4. But this relative inventory is down significantly from past few years.

Apr 16, 2014 10:31 PM #7
Rainmaker
1,570,174
David Saks
(retired) - Memphis, TN

Another fine post with lots of great information for all.

Apr 17, 2014 02:15 AM #8
Rainmaker
1,180,565
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate

Thank you David, rather confounding for me right now ...

Apr 17, 2014 02:35 AM #9
Rainmaker
73,627
Tarris Rogers
Cascade Sotheby's International Realty - Bend, OR
Bend Oregon Real Estate

That is a conundrum!  Hopefully the downturn is simply a temporary blip on the radar.  I've seen stranger things happen.

Apr 17, 2014 03:29 AM #10
Rainmaker
1,180,565
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate

Thanks Tarris, I hope so too.

Apr 17, 2014 03:31 AM #11
Rainmaker
798,409
Troy Erickson AZ Realtor (602) 295-6807
Good Company Real Estate www.ChandlerRealEstate.weebly.com - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

Joe, this is odd, but I think you partially answered your own question in one of your responses here in the comments. Your area has a large inventory of homes on the market, therefore your closings can increase while the number of new purchase agreements is gradually slowing down. Eventually, if you think of this logically, things will even out.

Apr 17, 2014 05:33 AM #12
Rainmaker
592,740
Than Maynard
Coldwell Banker Heart of Oklahoma - Purcell, OK
Broker - Licensed to List & Sell - 405-990-8862

It just goes to show that numbers can be manipulated to show what 'you' want to be seen.

In other words, statistics are easily manipulated. You could easily say you have a seller's market and a buyer's market just by using the different graphs!

Apr 17, 2014 07:46 AM #13
Rainer
482,918
Chandler Real Estate Liz Harris, MBA
Liz Harris Realty - Chandler, AZ
#ChandlerRealEstateAgent

Thanks for this amazing post.  It got right to the heart of the matter and I really value your take on it!  Have a great day... Liz Harris , Chandler, AZ

Apr 17, 2014 10:14 AM #14
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Rainmaker
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