As all my friends and family can attest, I’m no Albert Einstein, but I can still explain the concept of real estate relativity to those who get confused about the current supply and demand dynamic in housing.
Specifically, when discussing real estate relativity (or the relative supply of homes for sale), we look at the current number of homes for sale in Tallahassee and compare it with the current rate of demand.
To simply report the falling supply of homes for sale in the Tallahassee MLS without referencing the sales trends is like pointing out the falling supply of Ipad2 devices without acknowledging that demand has shifted to the Ipad3.
Real Estate Relativity In The Tallahassee MLS
When we look at a graph of all supply and demand for homes in the Tallahassee MLS, we are not first drawn to the falling supply of homes (even though it appears to be the hottest topic among real estate professionals right now). No, our eyes are actually first drawn to the green line in the real estate graph below, showing that demand is at an all time low.
Real Estate Relativity In Tallahassee
In the graph above, the data source is the entire Tallahassee MLS, which includes Leon County, Wakulla County, Gadsden County, Jefferson County, Franklin County, and “other” counties. It is far more than just the Tallahassee area, but Tallahassee represents the majority of all activity in the MLS.
The green line shows the trend of annual home sales, which is near an all-time low.
The red line records total listings (supply) in the MLS. Notice how it is at a four year low, but still far above what we saw prior to the boom of the housing market.
Currently, the real supply of homes is nearly double what we saw in July 2003, so reports of falling supply should be taken with a grain of salt.
The relative supply of homes (purple line in the graph) is at its lowest point in 5 years, and while that is good news, the 16 months of supply being reported is nearly 3x what is needed for a balanced real estate market.
Using Real Estate Relativity To Your Advantage
Whether you are thinking about buying a home or selling a home, or even both, knowing the real estate relativity of homes similar to yours will give you the knowledge to play the housing market to your best advantage.
If you want to know more about using real estate relativity to your advantage, then just drop me a note and we can schedule a time to discuss your personal situation.