Tallahassee Home Prices
Average home prices are toying with a record high in Tallahassee, so many people wonder why they are pushing so high and when might we see them come down. To answer this question, we have to consider the key components of price and value in real estate.
When we see average home prices move higher, we know that buyers are currently willing and able to spend more money on homes. Maybe they are buying bigger homes, or maybe they are paying more for same homes as previous buyers paid. That is why we also look to “value” when assessing appreciation in the market, as it provides an adjustment so that we can compare “apples to oranges.”
Future Home Prices
So where do we expect average home prices to go? Higher unfortunately. Much higher.
During this same period of time, minimum wage has shot up 64%. This means that the cost of building new homes is soaring. Mininimum wage impacts nearly every cost-category of building a new home, from the labor to build the home to the labor to produce, develop, and deliver the materials for the home. The one thing that labor does not impact is land prices.
Tallahassee Lot And Land Sales
The following graph plots lot and land sales for the past thirty years, with the number of lot sales in brown and measured on the left vertical axis, and the average lot price shown in green, measured on the right vertical axis.
We should expect land prices to be soaring too. We’ve spent the past 15 years with a glut of build-able lots due to the housing market collapse, so prices were were beaten down. But we have now consumed those lots and new ones will be scarcer and costlier. A trend of rising prices appears to have already begun.
Simply put, every aspect of producing new homes has gotten more expensive, so as Tallahassee grows, so too will our average home price. And very likely at a rate that far exceeds the rates we’ve seen in the past.
Of course, the main component that controls prices is the relationship between the supply and demand for homes in Tallahassee. If we see demand drop (perhaps the State cuts jobs or even moves away to Orlando), then we could see a glut of homes on the market. This glut would drive down prices. Unless you believe the State Capital is moving, do not expect to see this as a likely outcome in the near future.
I hope our mid-year housing report has given you the information you were looking for. If not, you can give us a call at (850) 366-8917 or drop us a note and we’ll help you with your specific Tallahassee real estate needs.
As somebody born and raised in Tallahassee with a focus on customer service, I promise you’ll find great success when working with Joe Manausa Real Estate, just as have our past customers. You can thousands of their reviews reported on Google, Facebook and Zillow right here: Real Estate Agent Reviews Tallahassee.