October 2019 Real Estate Market Update

June 9, 2020

the word october spelled out in wood letters on a table top surrounded by fall leaves

The Wall Street Journal (WSJ) did a survey of economists and asked a question: When will the next recession begin? We don’t think the recession is going to be anything like 2008. Morgan Housel said, “It might be over before we realized it began.” But, people may be panicking, especially coming into a presidential election year. So, what were the results of the WSJ survey?

The survey was given to 36 economists. Almost 47% think that the recession is going to occur before the end of next year, with another 28% saying it’s going to occur sometime in 2021.

This is home price changes during the last five recessions. And in 2008, prices dropped dramatically because the #1 trigger of that recession was the housing crash and the #2 trigger was a mortgage market meltdown. So, of course, it impacted the housing industry because it was the housing industry that caused the recession. But, if we look at the four of the five recessions prior to that, home values actually went up. The only time they didn’t, they went down by less than 2%.

As you can see here, the experts (even the ones predicting an economic slowdown) are projecting home price appreciation.

Affordability is determined by a few things:

1.      Price is a major portion of affordability. Wages are currently trending upwards.

2.     Interest rates also determine affordability. We see interest rates dropping, and, with wages increasing, it’s much more affordable to purchase a house now than it was in the past. In fact, accounting for inflation, the typical mortgage payment is $878.


Prices are going up. But, because interest rates are going down or staying down, and wages are going up, what we can see is we’re in good shape from an affordability standpoint.

Borrower equity rose to an all-time high in the first half of 2019 and has more than doubled since the housing recovery started. Combined with low mortgage rates, the rise in home equity supports spending on home improvements and may help improve balance sheets of households who could take out home equity loans to consolidate their debt.

Frank Nothaft, Chief Economist for CoreLogic

With home equity increasing so dramatically, people have that down payment in their existing home to move-up to the home of their dreams, and that’s important.


Let’s take a look at home equity by state. Across the country, there were only three states that didn’t see a major increase in home equity: North Dakota, Connecticut, and Delaware. North Dakota’s equity loss may be tied into the energy situation. Connecticut’s loss may be due to the salt tax adjustments. But, in the other 47 states home equity did increase and, in some states, rather dramatically over a 12-month period.


Even with a very conservative estimate of appreciation applied it to someone who purchased a home this past January (or even this coming January), over 5 years you could grow your wealth by $37,750!


So... what's going on in Tallahassee?

995

NEW LISTINGS

$208,693 

AVERAGE SOLD LIST PRICE

$237,593 

AVERAGE UNSOLD LIST PRICE

585

SOLD

$202,690

AVERAGE SOLD PRICE

96

AVERAGE DAYS ON MARKET

56%
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97%
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26%
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PERCENTAGE

LISTINGS SOLD

% SALES PRICE TO

 LISTING PRICE

PERCENTAGE

HOMES EXPIRED



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